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http://archive.Org/details/1  minutes2001  sanf 


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City  Hall 
Dr.  Carlton  B.  Goodlett  Place,  Room  244 
BOARD  of  SUPERVISORS  J]^  )*)  San  Francisco  94102^1689 

Tel.  No.  554-5184 
Fax  No.  554-5163 
\^        ?%£!/  TDD/TTY  No.  544-5227 

3<?0.  35^ 

»  j  NOTICE  OF  CANCELLED  MEETINGS 

,Jz7/00  FINANCE  AND  LABOR  COMMITTEE 

*-W^  £AN  FRANCISCO  £OARD  OF  SUPERVISORS 

1/3/c, 


NOTICE  IS  HEREBY  GIVEN  that  the  meetings  of  the  Finance  and  Labor  Committee 
scheduled  for  Wednesday,  December  27,  2000,  and  Wednesday,  January  3,  2001,  at 
10:00  a.m.,  at  1  Dr.  Carlton  B.  Goodlett  Place,  Room  263,  City  Hall,  San  Francisco, 
California,  have  been  cancelled. 


Gloria  L.  Young,  Clerk  of  the  Board 


DOCUMENTS  DEPT. 

DEC  2  0  2000 

SAN  FRANCISCO 
PUBLIC  LIBRARY 


POSTED:  DECEMBER  19.  2000 


Cancelled  Meeting  Nobce/Ad  1/21/00 


3  1223  06446  9811 


City  Hall 

\'£\  Dr.  Carlton  B.  Goodlett  Place.  Room  244 

San  Francisco  94102-4689 

Tel.  No.  554-5184 

Fax  No.  554-5163 

tX  \/Ts^^^v/  TDD/TTY  No.  544-5227 

•/ 

NOTICE  OF  CANCELLED  MEETING 
1//0/0I 

t**c*/J  PINANCE  AND  LABOR  COMMITTEE 

£AN  FRANCISCO  BOARD  OF  SUPERVISORS 


NOTICE  IS  HEREBY  GIVEN  that  the  meeting  of  the  Finance  and  Labor  Committee 
scheduled  for  Wednesday,  January  10,  2001,  at  10:00  a.m.   at  1  Dr.  Carlton  B.  Goodlett 
Place,  Room  263,  City  Hall,  San  Francisco,  California,  has  been  cancelled. 


Gloria  L.  Young,  Clerk  of  the  Board 


°°CUMENTS  OEPT 
JAN- 8  2001 

ueuc  librarv 


Cancelled  Meeting  Notice  Ad 


I  IN  VNCE  AND  LABOR  COMMITTEE 
S.F.  BOARD  OF  SUPERVISORS 
CITY  HALL.  ROOM  244 
I  DR  CARLTON  GOODLETT  PLACE 
SAN  FRANCISCO.  CA  94102-4 

IMPORTANT  HEARING  NOTICE!!! 


41  l.ibran 

100  l.arkin  Street  Govt  Information  <  enter 


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City  and  County  of  San  Francisco 

Meeting  Minutes 

Finance  and  Labor  Committee 

Members:  Supervisors  Leland  Yee,  Tom  Ammiano  and  Mark  Leno 


Clerk:  Gail  Johnson 


City  Hall 

1  Dr.  Carlton  B. 

Goodlett  Place 

San  Francisco,  CA 

94102-4689 


Wednesday,  January  17,  2001 


10:00  AM 
Regular  Meeting 


City  Hall,  Room  263 


Members  Present:      Leland  Y.  Yee,  Tom  Ammiano,  Mark  Leno. 


MEETING  CONVENED 

The  meeting  convened  at  10:08  a.m.     Board  President  Ammiano  appointed  Supervisor  Leno  to  serve  on  the 
Finance  and  Labor  Committee  for  today's  meeting. 

002191        [Contract  for  Electric  Service,  Treasure  Island  and  Yerba  Buena  Island] 

Resolution  approving  the  contract  between  the  City  and  County  of  San  Francisco  and  the  United  States, 
through  the  Department  of  Energy  Western  Area  Power  Administration,  for  the  delivery  of  low  cost  electric 
power  for  use  at  Treasure  Island  on  file  with  the  Clerk  of  the  Board  of  Supervisors  File  No.  002 191;  and 
approving  indemnifying  and  holding  harmless  the  United  States  against  claims  arising  from  the  activities  of  the 
City  under  the  contract;  and  waiving  requirement  of  Section  21.35  of  the  San  Francisco  Administrative  Code 
that  every  contract  contain  a  statement  regarding  liability  of  claimants  for  submitting  false  claims;  and  waiving 
requirement  of  Section  21.19  of  the  San  Francisco  Administrative  Code  that  every  contract  contain  a  statement 
regarding  guaranteed  maximum  costs.  (Public  Utilities  Commission) 

(Fiscal  impact.) 

12/13/00,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Maria  Jurosek,  Director  of  Retail  Ser\>ices, 
Public  Utilities  Commission;  Richard  Robinson,  McMillan  Drop-In  Center. 
RECOMMENDED  by  the  following  vote: 
Ayes:  3  -  Yee,  Ammiano,  Leno 


City  and  County  of  San  Francisco 


Printed  at  S." //  I'M   <•»    i  3  HJ 


Finance  and  Labor  Committee  Meeting  Minutes  January  17,  2001 


001796        |Creating  a  Special  Assistant  XVI  position  at  the  Board  of  Appeals,  while  Director  is  on  medical  leave| 

Ordinance  appropriating  5105,065  from  the  General  Fund  Reserve  to  fund  the  salary  and  fringe  benefits  of  a 
Special  Assistant  XVI  at  the  Board  of  Appeals,  while  Director  is  on  medical  leave  and  operating  expenses,  and 
amending  Annual  Salary  Ordinance  for  fiscal  year  2000-01.  (Controller) 

(Companion  measure  to  File  001797.) 

1 1/22/00,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee 
1 2/1 3/00,  SUBSTITUTED.  Substituted  by  Controller  1 2/1 3/00,  bearing  new  title. 
12/13/00,  ASSIGNED  to  Finance  and  Labor  Committee 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Linda  Avery,  Acting  Executive  Secretary, 
Board  of  Appeals.  Amended  as  follows :  On  page  I,  lines  2,  14  and  25,  by  replacing  "$105,065"  with 
"$73,364";  on  line  6,  by  adding  "placing  $36,682  on  reserve";  on  line  18,  by  replacing  "$52,184"  with 
"$49,972";  on  line  20,  by  replacing  "$20,919"  with  "$9,415";  on  line  22.  by  replacing  "$14,302"  with 
"$1 1,494";  on  line  23,  by  replacing  "$7,660"  with  "$2,483  "  Further  amended  on  page  2  by  adding  the 
following:   "Section  3.  Funds  in  the  amount  of  $36,682  are  hereby  placed  on  reserve  for  three  months,  to  be 
released  by  the  Finance  and  Labor  Committee. "  New  title. 
AMENDED. 

Ordinance  appropriating  $73,364  from  the  General  Fund  Reserve  to  fund  the  salary  and  fringe  benefits  of  a 
Special  Assistant  XVI  at  the  Board  of  Appeals,  while  Director  is  on  medical  leave  and  operating  expenses,  and 
amending  Annual  Salary  Ordinance  for  fiscal  year  2000-01;  placing  $36,682  on  reserve.  (Controller) 

(Companion  measure  to  File  001797.) 
RECOMMENDED  AS  AMENDED  by  the  following  vote: 

Ayes:  3  -  Yee,  Ammiano,  Leno 


001797        [Public  Employment,  Board  of  Appeals| 

Ordinance  amending  Ordinance  No.  181-00  (Annual  Salary  Ordinance,  2000'01 )  reflecting  the  creation  of  one 
position  at  the  Board  of  Appeals.  (Human  Resources  Department) 

(Companion  measure  to  File  001796.) 

1 1/22/00,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee 

12/13/00,  SUBSTITUTED.  Substituted  by  Human  Resources  Department  12/13/00.  bearing  same  title. 

12/13/00,  ASSIGNED  to  Finance  and  Labor  Committee. 

Heard  in  Committee.  Speakers:  Harvey  Rose.  Budget  Analyst;  Linda  Avery.  Acting  Executive  Secretary. 
Board  of  Appeals. 

RECOMMENDED  by  the  following  vote: 
Ayes:  3  -  Yee,  Ammiano,  Leno 


O'.v  and  County  of  San  Francisco  2  Primed  at  5: 1 1  PM  on  J  J  M 


Finance  and  Labor  Committee 


Meeting  Minutes 


January  17,  2001 


002087        [Fund  litigation  and  mediation  expenses  for  VIACOM,  AT&T,  and  TCI  appeals  for  the  Assessor's 
Office] 

Ordinance  appropriating  $1,245,909  of  the  General  Reserve-Litigation  to  fund  the  litigation  and  mediation 
expenses  associated  with  the  VIACOM,  AT&T,  and  TCI  appeals  and  development  and  implementation  of 
reengineering  plan  for  the  Assessor's  Office  for  fiscal  year  2000-01.  (Controller) 

(Fiscal  impact.) 

1 1/20/00,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee. 

12/1/00,  SUBSTITUTED.  From  Controller,  Funding  Sources  on  page  1 ,  line  13  should  have  reflected  "G"  for  grant  funded;  same  title. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Doris  Ward,  Assessor;  Edward  Harrington, 

Controller.  Amended  on  page  2,  lines  7  and  15,  by  replacing  "$223,887" with  "$176,297."  After  further 

consideration,  the  legislation  was  divided  into  two  separate  pieces.  See  File  010108. 

AMENDED. 

DIVIDED. 

Ordinance  appropriating  $471,593  of  the  General  Reserve  to  fund  the  litigation  and  mediation  expenses 

associated  with  the  VIACOM,  AT&T,  and  TCI  appeals  for  the  Assessor's  Office  for  fiscal  year  2000-01. 

(Controller) 

(Fiscal  impact.) 

RECOMMENDED  AS  DIVIDED  by  the  following  vote: 

Ayes:  3  -  Yee,  Ammiano,  Leno 


010108        [Fund  the  development  and  implementation  of  Reengineering  Plan  for  the  Assessor's  Office  Efficiency 
Program] 

Ordinance  appropriating  $726,726  of  the  General  Reserve  to  fund  the  implementation  of  Reengineering  Plan. 
for  the  Assessor's  Office  for  fiscal  year  2000-01.  (Assessor-Recorder) 

(Supervisor  Leno  dissenting  in  Committee.) 

Divided  from  File  002087. 

CONTINUED  TO  CALL  OF  THE  CHAIR  by  the  following  vote: 

Ayes:  3  -  Yee,  Ammiano,  Leno 


City  and  County  of  San  Francisco 


Printed  at  >:U  PH  on    I  '  II J 


Finance  and  Labor  Committee  Meeting  Minutes  January  I 7,  2001 


002184        |Funding  for  operating  costs  and  implementation  of  a  State  required  Customer  Service  Unit| 

Ordinance  appropriating  $839,562  to  support  both  continuing  operating  costs  and  the  implementation  of  a  State 
required  Customer  Service  Unit  ($594,262  for  Child  Support  Service  Division  and  $245,300  for  CSS  Cases 
Consortium)  and  the  creation  of  two  positions  at  the  Department  of  Child  Support  for  fiscal  year  2000-01 . 
(Controller) 

(Fiscal  impact;  Companion  measure  to  File  002183.) 
12/13/00,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Milton  Hyams.  Acting  Director,  Department  of 
Child  Support  Services.  Amended  on  page  1  asfollows:  On  line  2,  by  replacing  "$839,562"  with  "780.837"; 
on  line  3,  by  replacing  "$594,262"  with  "$535,537";  on  line  5.  by  adding  "ratifying  action  previously  taken  ", 
on  line  15,  by  replacing  "$392,214"  with  "$353,455";  on  line  18.  by  replacing  "$202,048"  with  "$182,082"; 
on  line  22,  by  replacing  "$85,416"  with  "$53,385";  on  line  24.  by  replacing  "$21,354"  with  "$13,346". 
Amended  on  page  2  asfollows:  On  line  16,  by  replacing  "$144,945"  with  "$126,259";  and  on  line  18.  by- 
replacing  "$839,562"  with  "780,837".  Amended  on  page  3  by  adding  the  following:   "Section  3.    The 
Department  of  Child  Support  Sen'ices  shall  eliminate  the  two  8204  Institutional  Police  Officer  positions  as 
soon  as  each  position  becomes  vacant. "  Further  amended  on  page  3  by  adding  Section  4  to  provide  for 
ratification  of  action  previously  taken.  New  title 
AMENDED. 

Ordinance  appropriating  $780,837  to  support  both  continuing  operating  costs  and  the  implementation  of  a  State 
required  Customer  Service  Unit  ($535,537  for  Child  Support  Service  Division  and  $245,300  for  CSS  Cases 
Consortium)  and  the  creation  of  two  positions  at  the  Department  of  Child  Support  for  fiscal  year  2000-01; 
ratifying  action  previously  taken.  (Controller) 

(Fiscal  impact;  Companion  measure  to  File  002183.) 
RECOMMENDED  AS  AMENDED  by  the  following  vote: 

Ayes:  3  -  Yee,  Ammiano,  Leno 


002183        [Creating  two  (2)  positions  in  Child  Support  Scrviccs| 

Ordinance  amending  Ordinance  No.  181-00  (Annual  Salary  Ordinance,  2000/01 )  reflecting  the  creation  of  two 
positions  in  Child  Support  Services.  (Human  Resources  Department) 

(Fiscal  impact;  Companion  measure  to  File  002184.) 
12/13/00,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee 

Heard  in  Committee.  Speakers:  Harvey  Rose.  Budget  Analyst:  Milton  Hyams.  Acting  Director.  Department  of 
Child  Support  Sen'ices. 
RECOMMENDED  by  the  following  vote: 
Ayes:  3  -  Yee,  Ammiano,  Leno 


City  and  County-  of  San  Francisco  4  Printed  at  5:12  P\1 


Finance  and  Labor  Committee 


Meeting  Minutes 


January  17,  2001 


001251        [Reserved  Funds,  Department  of  Public  Health] 

Hearing  to  consider  release  of  reserved  funds,  Department  of  Public  Health  (Fiscal  Year  2000-2001  Budget), 
in  the  amount  of  $1,233,854,  to  fund  the  San  Francisco  General  Hospital-Department  of  Psychiatry  Acute 
Inpatient  Service.  (Public  Health  Department) 
12/6/00,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Ken  Bruce,  Budget  Analyst's  Office;  Monique 
Zmuda,  Chief  Financial  Officer,  Department  of  Public  Health.  Release  of  reserved  funds  in  the  amount  of 
$1,233,854  approved. 

APPROVED  AND  FILED  by  the  following  vote: 
Ayes:  3  -  Yee,  Ammiano,  Leno 


002187        [Contract  between  the  Dept.  of  Public  Health  and  Health  Advocates,  LLP  to  provide  uncompensated 
care  recovery  services] 

Resolution  authorizing  the  Director  of  Public  Health  and  the  Purchaser  to  execute  a  contract  between  the  City 

and  County  of  San  Francisco  and  Health  Advocates,  LLP  to  provide  uncompensated  care  recovery  services. 

(Public  Health  Department) 

12/13/00,  RECEIVED  AND  ASSIGNED  to  Public  Health  and  Environment  Committee. 

12/28/00,  TRANSFERRED  to  Finance  and  Labor  Committee.  At  the  request  of  the  President,  this  matter  is  to  be  scheduled  for  the 

January  10,  2001  meeting. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Monique  Zmuda,  Chief  Financial  Officer, 
Department  of  Public  Health;  Steve  Reid,  President,  Paralign;  Diane  Sovereign  (attorney);  Linda  Safir, 
Director  of  Sales,  Paralign;  Karla  Fine,  Manager,  Paralign;  Fanny  Mayorga,  Paralign;  Juan  Sosa,  Paralign; 
Helen  Lim,  Paralign;  Robert  McCarthy  (registered  to  speak  for  Paralign);  Al  Leibovic,  Health  Advocates; 
Theodore  Lakey,  Deputy  City  Attorney;  Edward  Harrington,  Controller. 
Continued  to  January  31,  2001. 
CONTINUED  by  the  following  vote: 
Ayes:  3  -  Yee,  Ammiano,  Leno 


002185        [Lease  of  property  for  DPH-Health  Promotion  and  Prevention  Unit  currently  located  at  101  Grove 
Street,  to  alleviate  overcrowding] 

Resolution  authorizing  the  lease  of  1 1,125  square  feet  at  30  Van  Ness  Avenue  for  the  Department  of  Public 
Health.  (Public  Health  Department) 

(Fiscal  impact.) 

12/13/00,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Anthony  Delucchi,  Director  of  Property.  Real 
Estate  Department. 

RECOMMENDED  by  the  following  vote: 
Ayes:  3  -  Yee,  Ammiano,  Leno 


City  and  County  of  San  Francisco 


Printed  at  5:12  PM  on    I   MM 


Finance  and  Labor  Committee  Meeting  Minutes  January  I ",  2001 


002145        [S.  F.  International  Airport  Advertising  Program  Lease| 

Resolution  approving  San  Francisco  International  Airport  Advertising  Program  Lease  between  Transportation 
Media,  Inc.  (a  division  of  Eller  Media)  and  the  City  and  County  of  San  Francisco,  acting  by  and  through  its 
Airport  Commission.  (Airport  Commission) 
1 2/6/00,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee 

Heard  in  Committee.  Speakers;  Harvey  Rose,  Budget  Analyst;  Cathy  Widener,  Governmental  Affairs 
Administrator,  Airport. 
Continued  to  January  31,  2001. 
CONTINUED  by  the  following  vote: 
Ayes:  3  -  Yee,  Ammiano,  Leno 


001252        |Rescrved  Funds,  Port  of  San  Francisco] 

Hearing  to  consider  release  of  reserved  funds,  Port  of  San  Francisco  (San  Francisco  Harbor  Operating  Funds, 
File  101-96-19,  Ordinance  No.  470-96),  in  the  amount  of  $460,000  for  Piers  48  and  50  Fire  Protection  project. 
(Port) 

12/5/00,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Imani  Haygood,  Port    Release  of  reserved 
funds  in  the  amount  of  $460,000  approved 
APPROVED  AND  FILED  by  the  following  vote: 

Ayes:  2  -  Yee,  Leno 

Absent:  1  -  Ammiano 


002163        [Contracting  out  City  services] 
Mayor 

Resolution  concurring  with  the  Controller's  certification  that  assistance  to  certain  victims  of  crime  and 

education  in  community  anti-street  violence  can  be  practically  performed  for  the  District  Attorney's  Victim 

Witness  Assistance  Program  by  a  private  contract  for  a  lower  cost  than  similar  work  services  performed  by 

City  and  County  employees. 

12/1 1/00,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee 

Heard  in  Committee.  Speaker:  Harvey  Rose.  Budget  Analyst    Amended  on  page  1,  line  2,  after  "concurring. " 

and  on  page  2.  line  4,  after  "concurs, "  by  adding  "retroactively  " 

AMENDED. 

Resolution  concurring,  retroactively,  with  the  Controller's  certification  that  assistance  to  certain  victims  of 

crime  and  education  in  community  anti-street  violence  can  be  practically  performed  for  the  District  Attorney's 

Victim  Witness  Assistance  Program  by  a  private  contract  for  a  lower  cost  than  similar  work  services  performed 

by  City  and  County  employees. 

RECOMMENDED  AS  AMENDED  by  the  following  vote: 

Ayes:  2  -  Yee,  Leno 

Absent:  1  -  Ammiano 


City  and  County  of  San  Francisco  6  Printed  at  5:1?  PW  or  }  3  i  •'- 


Finance  and  Labor  Committee 


Meeting  Minutes 


January  1 7,  2001 


002186        [Option  to  extend  lease  at  One  Market  Plaza  (Steuart  Tower,  Second  Floor)  for  Dept.  of 
Telecommunications  and  Information  Services] 

Resolution  authorizing  the  exercise  of  option  regarding  an  extension  of  a  real  property  lease  at  One  Market 
Plaza,  on  behalf  of  the  Department  of  Telecommunications  and  Information  Services.  (Real  Estate  Department) 

(Fiscal  impact.) 

1 2/1 3/00,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee.  Sponsor  requests  that  this  item  be  scheduled  for  the  January 

10,  2001,  meeting.  Item  needs  to  be  considered  as  soon  as  possible. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Anthony  Delucchi,  Director  of  Property,  Real 
Estate  Department. 

RECOMMENDED  by  the  following  vote: 
Ayes:  3  -  Yee,  Ammiano,  Leno 


002217        [Reserved  Funds,  Police  Department] 

Hearing  to  consider  release  of  reserved  funds,  Police  Department  (Fiscal  Year  2000-01  Budget),  in  the  amount 
of  $4,297,098  to  defray  overtime  costs.  (Police  Department) 
12/20/00,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst:  Captain  John  Goldberg,  Police  Department, 
Fiscal  Division.  Release  of  reserved  funds  in  the  amount  of $4,297,098  approved. 
APPROVED  AND  FILED  by  the  following  vote: 
Ayes:  3  -  Yee,  Ammiano,  Leno 


ADJOURNMENT 

The  meeting  adjourned  at  12:29 p.m. 


City  and  County  of  San  Francisco 


I'rinlc.Ul  hll  I'M   M     I   I  04 


3 
\ln/o\ 


[Budget  Analyst  Report] 

Susan  Horn 

Main  Library-Govt.  Doc.  Section 


CITY  AND  COUNTY 


OF  SAN  FRANCISCO 


DOCUMENTS  DEPT 
^OARD  OF  SUPERVISORS 

JAN  t  1  2001 

BUDGET  ANALYST 
1390  Market  Street,  Suite  1025,  San  Francisco,  CA  94102  (415)  554-76§j?N  FRANClSCO 
FAX  (415)  252-0461  DBL,C  L'BRARY 

r 

January  11,  2001 

TO:  'Finance  and  Labor  Committee 

FROM:         Budget  Analyst 

SUBJECT:  January  17,  2001  Finance  and  Labor  Committee  Meeting 


Item  1  -  File  00-2191 

Department: 

Item: 


Electric  Service 
Provider: 


Public  Utilities  Commission  (PUC) 

Resolution  approving  tbe  contract  between  tbe  City  and 
County  of  San  Francisco  and  the  United  States,  through 
the  Department  of  Energy  Western  Area  Power 
Administration,  for  the  delivery  of  low  cost  electrical 
power  for  use  at  Treasure  Island;  and  approving, 
indemnifying,  and  holding  harmless  the  United  States 
against  claims  arising  from  the  activities  of  the  City 
under  the  contract;  and  waiving  the  requirement  of 
Section  21.35  of  the  San  Francisco  Administrative  Code 
that  every  contract  contain  a  statement  regarding  liability 
of  claimants  for  submitting  false  claims;  and  waiving  the 
requirement  of  Section  21.19  of  the  San  Francisco 
Administrative  Code  that  every  contract  contain  a 
statement  regarding  guaranteed  minimum  costs. 


Administrator,    Western    Area    Power    Administration, 
United  States  Department  of  Energy  (WAP A) 


Memo  to  the  Finance  aiid  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


Term  of  Contract: 


January  1,  2005  to  December  31,  2024  (20  year  term). 
According  to  Ms.  Maria  Jurosek  of  the  PUC,  this  contract 
is  being  prepared  four  years  in  advance  of  its 
commencement  date  in  order  to  comply  with  WAPA's 
contracting  timeline  to  secure  the  continuation  of  WAPA 
electric  service  provision  for  twenty  years  after  January  1, 
2005.  Ms.  Jurosek  states  that,  by  law,  Federal  preference 
hydropower  (including  the  electrical  power  generated  by 
WAPA)  must  be  sold  at  cost  and  only  for  authorized  uses. 
The  development  of  Treasure  Island1  is  such  an 
authorized  use. 


Cost  Payable  by  the 

City  to  the  United 

States  Department  of 

Energy:  Up   to   a   maximum  of  $20,000,000,    at    an   average   of 

$1,204,500  per  year  over  the  20  year  term  of  the  proposed 

contract  (see  Comment  No.  3). 


Source  of  Funds: 


Description: 


Proceeds  of  the  sale  of  electrical  power  to  Treasure  Island 
tenants.  These  proceeds  are  held  by  the  Treasure  Island 
Development  Authority.  According  to  Ms.  Eila  Arbuckle 
of  the  Treasure  Island  Development  Authority,  the 
Treasure  Island  Development  Authority  is  self-supporting 
through  facility  rentals. 

The  City  is  currently  providing  operations  and 
maintenance  services  at  Treasure  Island,  initially  under  a 
multi-year  Cooperative  Agreement  with  the  U.S.  Navy. 
The  Cooperative  Agreement  with  the  Navy  was  approved 
by  the  Board  of  Supervisors  in  August  of  1997  (File  244- 
97-4).  Ms.  Arbuckle  states  that  the  bulk  of  Navy  financial 
support  expired  on  September  30,  2000,  with  ongoing 
minimal  funding  of  $145,000  for  caretaking  services 
provided  until  September  30,  2001.  Ms.  Arbuckle  further 
states  that  the  Treasure  Island  Development  Authority 
has  issued  a  Request  for  Qualifications  for  a  primary 
developer  for  Treasure  Island  and  a  selection  is  due  to  be 
made  by  June  30,  2001,  at  which  time  the  City  expects  to 
acquire  the  title  to  former  Treasure  Island  Naval  Station 


1  All  references  to  Treasure  Island  in  the  proposed  contract  and  this  report  also  refer  to  the 
adjoining  Yerba  Buena  Island. 

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Memo  to  the  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


and  transfer  management  responsibility  to  the  selected 
"developer.  Una  ef  the  Federal  Base  Closure  and 
Realignment  Act,  the  City  is  the  local  reuse  authority  for 
the  Treasure  Island  Naval  Station.  As  the  local  reuse 
authority,  the  City  has  acted  as  the  entity  focused  on  the 
planning,  redevelopment,  reconstruction,  rehabilitation, 
reuse,  and  conversion  of  the  Treasure  Island  Naval 
Station  for  the  public  interest,  convenience,  welfare,  and 
common  interest  of  the  citizens  of  San  Francisco.  Since 
October  1,  1997,  the  PUC  has  been  providing  electrical 
power  to  Treasure  Island,  initially  purchasing  WAPA 
electrical  power  through  the  Navy,  and  then  purchasing 
WAPA  electrical  power  directly  under  the  PUC's  existing 
contract  with  WAPA,  as  explained  below. 

Under  the  Federal  Base  Closure  and  Realignment  Act, 
the  United  States  Department  of  Energy  makes  low-cost 
Federal  electrical  power  available  to  support  economic 
development  for  the  conversion  of  military  bases. 
Between  October  1,  1997  and  September  29,  1998,  the 
Navy  purchased  such  Federal  electrical  power  from 
WAPA  on  behalf  of  the  PUC  in  order  to  supply  electrical 
power  to  Treasure  Island.  On  October  7,  1998,  the  Board 
of  Supervisors  approved  a  contract  between  the  City  and 
the  United  States  Department  of  Energy  which  enabled 
the  PUC  to  purchase  such  power  directly  from  WAPA  in 
order  that  the  City  could  continue  to  receive  the  benefits 
of  the  low  cost  Federal  electrical  power  without  having  to 
purchase  it  through  the  Navy  (File  98-1776).  This 
contract  came  into  effect  on  October  1,  1998  and  is  due  to 
expire  on  December  31,  2004. 

Approval  of  the  subject  resolution  would  enable  the  City 
to  continue  purchasing  low  cost  Federal  National  Defense 
Authorization  Act  electrical  power  for  Treasure  Island  for 
an  additional  20  years. 


Comments:  Cost 


1.  WAPA  would  provide  electrical  power  to  the  City  on  a 
"take-or-pay  basis."  Under  this  arrangement,  the  City 
would  be  obligated  to  pay  for  its  percentage  share  of  the 
costs  related  to  WAPA's  generation  of  electrical  power, 
whether  or  not  the  City  uses  its  full  allocation  of  electrical 


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Memo  to  the  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


power.  According  to  Ms.  Jurosek  and  Mr.  Joe  Como  of  the 
"City  Attorney  s~Offi.ce,  the  City's  allocation  is  0.17264 
percent  of  WAPA's  total  electrical  power  generation, 
based  on  (a)  the  percentage  of  WAPA  resources  provided 
to  the  Navy  at  the  Treasure  Island  Naval  Station  prior  to 
its  closure,  and  (b)  a  small  additional  percentage  of  power 
which  WAPA  has  determined  that  each  of  its  customers 
could  use  in  the  future2.  The  City  would  pay  for  that 
allocation  of  electrical  power  in  accordance  with  a 
schedule  of  rates  determined  by  the  United  States 
Department  of  Energy5.  The  subject  contract  provides  for 
an  exchange  program  whereby  the  City  could  make  any 
unusable  portion  of  its  WAPA  electrical  power  allocation 
available  to  other  WAPA  customers.  The  City  would  be 
reimbursed  at  a  "pool  energy  rate"  determined  by  the 
United  States  Department  of  Energy.  Any  electrical 
power  not  consumed  by  WAPA  customers  could  be 
provided  by  WAPA  to  the  open  market.  Revenues 
collected  by  WAPA  from  the  open  market  would  be 
credited  to  the  customers  up  to  the  "pool  energy  rate",  and 
any  revenues  in  excess  of  that  rate  would  be  retained  by 
WAPA4. 

2.  According  to  Ms.  Jurosek,  the  peak  electric  demand  on 
Treasure  Island  is  currently  3  megawatts  of  electrical 
power  and  growing.  Under  the  proposed  contract,  the 
initial  WAPA  allocation  is  between  3  and  5  megawatts  of 
electrical  power.  The  peak  demand  for  electrical  power 
upon  completion  of  development  on  Treasure  Island  is 
unknown,  but  depending  on  the   development  concepts 


2  The  subject  contract  provides  for  the  City's  percentage  to  be  adjusted  on  January  1,  2015,  as  part 
of  the  United  States  Department  of  Energy's  establishment  of  a  2015  Resource  Pool  for  new  power 
allocations.  Any  reallocations  would  be  based  on  WAPA  customers'  actual  electrical  power  usage  in 
2015.  Ms.  Jurosek  states  that  this  action  in  2015  would  represent  a  mid-term  reallocation  of 
resources  based  on  actual  usage. 

3  The  United  States  Department  of  Energy  can  change  the  rates  unilaterally,  but  its  customers  can 
terminate  the  services  being  charged  at  the  new  rates  within  two  years  of  the  effective  date  of  the 
rate  change  (so  long  as  they  provide  written  notice  of  their  intention  to  terminate  within  90  days  of 
the  effective  date  of  the  new  rate).  Ms.  Jurosek  advises  that  this  minimizes  the  City's  risk  if 
electrical  power  provided  by  WAPA  at  some  point  becomes  more  expensive  than  other  options. 
However,  even  if  the  City  terminates  WAPA's  services,  the  City  would  still  be  required  to  pay  at  the 
new  rate  for  services  consumed  after  the  effective  date  of  the  rate  change. 

4  According  to  Ms.  Jurosek,  while  the  City  currently  pays  for  more  WAPA  power  than  it  actually 
uses  on  Treasure  Island  under  the  "take-or-pay  basis"  of  the  current  WAPA  contract,  the  City  has 
been  reimbursed  at  a  "pool  energy  rate"  for  that  portion  of  its  electrical  power  allocation  which  it  has 
not  used  but  instead  made  available  to  other  WAPA  customers,  or  to  the  open  market. 

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Memo  to  the  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


actually  constructed,  the  peak  demand  has  been  projected 
to  be  as  high  as  20  megawatts  of  electrical  power. 

Ms.  Jurosek  states  that  the  average  cost  of  WAPA 
electrical  power  over  the  20  year  term  is  projected  to  be 
$50  per  megawatt,  based  on  an  average  5  megawatt  peak 
demand  over  a  one  year  period,  at  a  55  percent  load  factor 
per  year  for  20  years.  This  would  result  in  a  projected 
annual  cost  of  approximately  $1,204,500  per  year5  which, 
over  20  years,  would  exceed  the  $20,000,000  cap  approved 
by  the  Public  Utilities  Commission  in  its  resolution  of 
November  14,  2000  (see  Comment  No.  3).  By  contrast,  if 
the  City  had  to  purchase  that  amount  of  electrical  power 
on  the  spot  market  at  today's  prices,  it  could  cost 
approximately  $6,022,500  per  year6,  or  $4,818,000  or  400 
percent  more  per  year  than  power  purchased  under  the 
proposed  WAPA  contract.  Ms.  Jurosek  calculated  the  spot 
market  figure  on  the  basis  of  the  short  term  average  price 
for  electrical  power  in  December  of  2000  of  $250  per 
megawatt  hour,  noting  that  power  exhange  prices  spiked 
as  high  as  $1,500  per  megawatt  hour  in  December  of 
19997. 

3.  Ms.  Jurosek  advises  that  the  estimated  cost  of 
$1,204,500  per  year  for  20  years  under  the  proposed 
WAPA  contract  would  total  $24,090,000,  which  exceeds 
the  $20,000,000  cap  approved  by  the  Public  Utilities 
Commission  in  its  resolution  of  November  14,  2000.  Ms. 
Jurosek  states  that  the  PUC  will  track  its  purchases 
under  the  proposed  WAPA  contract  and  if  it  believes  that 
it  will  exceed  the  $20,000,000  cap,  it  will  request  approval 
of  an  increase  in  that  cap  by  the  Public  Utilities 
Commission  and  the  Board  of  Supervisors. 


5  Ms.  Jurosek  calculates  the  figure  of  $1,204,500  as  follows:  5  megawatts  x  24  hours  x  365  days  x  55 
percent  average  load  factor  =  24,090  megawatts  x  $50  =  $1,204,500. 

6  Ms.  Jurosek  calculates  the  figure  of  $6,022,500  using  the  same  assumptions  about  electrical  power 
consumption  on  Treasure  Island  as  above,  as  follows:  5  megawatts  x  24  hours  x  365  days  x  55 
percent  average  load  factor  =  24,090  megawatts  x  $250  -  $6,022,500. 

7  Ms.  Jurosek  notes,  with  regard  to  electrical  power  imported  into  California,  that  the  highest  price 
at  the  California-Oregon  border  thus  far  in  FY  2000-01  has  been  $4,500  per  megawatt  hour,  and  that 
the  highest  price  paid  by  Hetch  Hetchy  thus  far  in  FY  2000-01  has  been  $800  per  megawatt  hour. 

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Memo  to  the  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 

Contract  Details 


4.  Mr.  Como  states  that  the  contract  with  the  United 
States  Department  of  Energy  requires  that  the  City 
indemnify  and  hold  harmless  the  Federal  Government 
against  claims  arising  from  the  activities  of  the  City. 
Therefore,  this  proposed  resolution  includes  such  an 
indemnification  provision.  Mr.  Como  states  that  the 
proposed  indemnification  provision  poses  minimal  risk  to 
the  City  because  the  City  is  purchasing  a  commodity  from 
the  Federal  Government  in  the  form  of  electrical  power. 
According  to  Mr.  Como,  under  a  commodity  purchase 
contract  with  the  Federal  Government,  there  is  minimal 
probability  that  the  Federal  Government  would  be 
harmed  by  its  contract  to  sell  power  to  the  City. 
Therefore,  according  to  Mr.  Como,  it  is  fair  to  say  that 
there  is  minimal  risk  to  the  City  in  indemnifying  WAPA. 

5.  The  Administrative  Code  requires  all  City  contracts  to 
contain  language  regarding  (a)  a  guaranteed  maximum 
cost  under  a  contract  (Section  21.19),  and  (b)  the 
consequences  of  submitting  false  claims  to  the  City 
(Section  21.35).  The  proposed  resolution  would  waive 
such  requirements.  According  to  Mr.  Como,  the  United 
States  Department  of  Energy  insists  on  using  its  standard 
contract  language  for  this  contract  and  such  language 
does  not  include  the  provisions  that  are  required  by  the 
Administrative  Code  Sections  21.19  and  21.35. 

According  to  Mr.  Como,  there  is  no  need  for  a  contract 
maximum,  as  required  by  Section  21.19  of  the 
Administrative  Code.  In  approving  the  contract,  the 
Public  Utilities  Commission  has  stipulated,  in  the  PUC 
resolution  approved  on  November  14,  2000,  that  total 
expenditures  through  the  contract  term  ending  on 
December  31,  2024  shall  not  exceed  $20,000,000.  That 
amount  will  be  certified  by  the  Controller.  As  the  amount 
is  calculated  on  the  basis  of  the  maximum  volumes 
available  to  the  City  under  the  contract,  greater 
expenditures  would  not  be  possible,  according  to  Mr. 
Como. 

With  regard  to  Section  21.35  of  the  Administrative  Code, 
Mr.  Como  advises  that,  since  the  City  is  easily  able  to 

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Memo  to  the  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


verify  the  amounts  of  electrical  power  that  are  purchased 
and  the  price  per  kilowatt  hour  is  stipulated  in  the 
contract,  contract  language  regarding  the  consequences  of 
submitting  false  claims  to  the  City  is  unnecessary 


Recommendation:  Approve  the  proposed  resolution. 


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Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 

Items  2  and  3  -  Files  00-1796  and  00-1797 

Note:  This  report  is  based  on  an  Amendment  of  the  Whole  for  both  File  00-1796 
and  File  00-1797  submitted  by  the  Board  of  Appeals,  which  will  be 
introduced  at  the  January  10,  2001  Finance  and  Labor  Committee  Meeting. 
The  Amendment  of  the  Whole  reclassifies  the  proposed  new  position  from 
Special  Assistant  XV  1374L  to  Special  Assistant  XVI  1375L  to  reflect  the 
current  Planning  Department  position  held  by  the  individual  that  has 
assumed  the  duties  of  the  Executive  Secretary  of  the  Board  of  Appeals. 

Department:  Board  of  Appeals 

Items:  Item  3  -  File  00-1796:  Ordinance  appropriating  $105,065 

from  the  General  Fund  Reserve  to  fund  the  salary  and  fringe 
benefits  of  a  Special  Assistant  XVI  at  the  Board  of  Appeals 
while  the  Executive  Secretary  is  on  medical  leave,  operating 
expenses  and  amending  the  Annual  Salary  Ordinance  for  FY 
2000-01. 


Amount: 
Source  of  Funds: 
Description: 


Item  4  -  File  00-1797:  Ordinance  amending  No.  181-00 
(Annual  Salary  Ordinance,  2000/01)  reflecting  the  creation  of 
one  0.61  FTE  Special  Assistant  XVI  1375  Limited  duration 
position  at  the  Board  of  Appeals. 

$105,065 

General  Fund  Reserve 

File  00-1796:  The  Board  of  Appeals  (BOA)  is  requesting  a 
supplemental  appropriation  in  the  amount  of  $105,065  from 
the  General  Fun  Reserve  to  fund  overtime  salaries  and  a 
0.61  FTE  Special  Assistant  XVI  1375L  Limited  Duration 
position  and  provide  additional  funds  for  an  existing 
Temporary  Exempt  1426  Senior  Clerk  Typist  position  in  the 
BOA. 

According  to  Ms.  Catherine  Johnson  of  the  BOA,  the  BOA 
Executive  Secretary  suffered  a  stroke  and  went  on  sick  leave 
on  September  5,  2000.  Ms.  Johnson  advises  that  since  the 
Executive  Secretary's  departure,  the  existing  BOA  staff  have 
been  working  overtime  to  ensure  that  the  Appeal  Hearings 
would  continue,  as  scheduled.  Therefore,  Ms.  Johnson 
advises  that  the  BOA  is  requesting  a  supplemental 
appropriation  for  overtime  in  the  amount  of  $7,660  for  the 
period  from  September  18,  2000  through  June  30,  2001,  so 

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Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 

that  the  BOA  staff  can  continue  to  staff  the  schedule  Appeal 
—Hearings  (See  Comment  5). — — 


According  to  Ms.  Johnson,  the  Executive  Secretary  is 
currently  on  sick  leave  and  is  therefore  still  on  the  BOA 
payroll.  Ms.  Johnson  advises  that  Ms.  Linda  Avery  from  the 
Planning  Department  became  the  BOA  Acting  Executive 
Secretary  on  approximately  November  29,  2000.  In  the 
proposed  ordinances,  Ms.  Avery's  position  is  coded  as  a 
Special  Assistant  XVI  1375L,  a  Limited  Duration  position 
that  is  intended  to  terminate  at  the  end  of  FY  2000-2001. 
The  proposed  supplemental  appropriation  ordinance  for 
$105,065  designates  $62,184  of  the  supplemental 
appropriation  for  salary  and  $14,302  of  the  supplemental 
appropriation  for  fringe  benefits.  Ms.  Myrna  Lopez  of  the 
Mayor's  Budget  Office  advises  that  the  Special  Assistant  XVI 
1375  L  position  was  prorated  to  0.61  FTE  because  the 
Special  Assistant  XVI  was  intended  to  start  as  the  Acting 
Executive  Director  in  late  November  of  2000  (see  Comment 
3). 

According  to  Ms.  Johnson,  when  the  Executive  Secretary 
went  on  sick  leave,  the  BOA  had  to  increase  the  hours  of  its 
existing  1426  As-Needed  Senior  Clerk  Typist  from  part-time, 
4  hours  a  day,  to  full-time,  8  hours  a  day,  to  help  the  BOA 
handle  its  caseload.  Ms.  Johnson  notes  that  when  the  Senior 
Clerk  Typist  went  to  full-time,  the  BOA  coded  the  position  as 
Temporary  Exempt  so  that  the  employee  would  be  eligible  for 
overtime  pay.  Ms.  Johnson  states  that  they  will  need  to 
continue  to  have  a  Temporary  Exempt  1426  Senior  Clerk 
Typist  full-time  until  the  end  of  the  fiscal  year  so  that  the 
Temporary  Exempt  Senior  Clerk  Typist  can  assist  the  Acting 
Executive  Secretary  in  conducting  the  Appeal  Hearings. 
Therefore,  the  BOA  is  requesting  additional  Temporary 
Salary  funds  for  the  Temporary  Exempt  1426  Senior  Clerk 
Typist  from  October  14,  2000  through  June  30,  2001  in  the 
amount  of  $20,919  (see  Comment  4). 

File  00-1797:  The  proposed  ordinance  would  amend  the 
Annual  Salary  Ordinance  to  create  the  requested  Special 
Assistant  XVI  1375L  position.  As  noted  above,  the  position 
would  be  for  a  limited  duration,  terminating  when  the  BOA 
Executive  Secretary  returns  from  sick  leave,  which  Ms. 
Johnson  anticipates  would  be  at  the  beginning  of  FY  2001- 
2002. 

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Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


Budget: 


Comments: 


The  budget  for  the  requested  supplemental  appropriation 
(File  00-1796)  is  as  follows: 

Salary-Special  Assistant  XVI  $62,184 

Fringe  Benefits-Special  Assistant  XVI  14,302 

Temporary  Salaries  20,919 

Overtime  7,660 

Total  $105\065 

1.  According  to  Ms.  Lopez,  as  reflected  in  the  Amendment  of 
the  Whole,  Ms.  Avery's  position  as  Special  Assistant  XVI 
1375  is  at  the  same  classification  as  her  position  in  the 
Planning  Department.  Ms.  Avery  advises  that  her  title  in 
the  Planning  Department  was  Chief  of  Personnel/ 
Commission  Secretary. 

2.  According  to  Ms.  Lopez,  Ms.  Avery  must  be  on  the  BOA 
payroll  in  order  for  Ms.  Avery  to  have  the  authority  to  handle 
the  purchasing,  payroll  and  personnel  matters  for  the  BOA. 
According  to  Mr.  Costilino  Hogan  from  the  Planning 
Department,  Ms.  Avery's  position  in  the  Planning 
Department  would  be  backfilled  by  Planning  Department 
employees  during  her  absence,  such  that  there  would  not  be 
sufficient  salary  savings  to  transfer  to  the  Board  of  Appeals 
to  fully  cover  Ms.  Avery's  costs  due  to  temporary  promotions 
and  salary  increases  for  existing  Planning  Department  staff. 
Furthermore,  Ms.  Lopez  advises  that,  except  on  the  initial 
interim  basis,  Ms.  Avery's  salary  and  fringe  benefits  should 
not  be  funded  by  the  Planning  Department's  budget  and  then 
transferred  to  the  BOA's  budget,  because  it  would  be  a 
conflict  of  interest  to  have  the  Planning  Department  pay  for 
the  salary  of  the  Executive  Secretary  of  the  BOA,  since  the 
BOA  is  directly  responsible  for  hearing  appeals  of  permit 
cases  from  the  Planning  Department. 

3.  According  to  Ms.  Lopez,  the  Planning  Department  paid 
Ms.  Avery's  salary  on  an  interim  basis  from  November  29 
2000  through  January  1,  2001.  Ms.  Lopez  advises  that  a 
requisition  was  approved  on  January  2,  2001  to  transfer  Ms. 
Avery  from  the  Planning  Department  to  BOA,  such  that  the 
BOA  can  now  begin  paying  Ms.  Avery's  salary  and  fringe 
benefits  as  of  the  first  week  of  January  of  2001.  The  biweekly 
compensation  for  a  1375  Special  Assistant  XVI  ranges  from 


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BUDGET  ANALYST 

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Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


$3,162  to  $3,844,  or  from  $82,212  to  $99,944  annually.  Ms. 
Avery  is  currently  paid  at  tbe  top  step,  or  $99,944  annually. 

Tberefore,  tbe  Budget  Analyst  notes  tbat  tbe  proposed 
supplemental  appropriation  for  permanent  salaries  and 
fringe  benefits  should  be  reduced  to  reflect  the  actual  timing 
of  the  proposed  position  from  the  end  of  November  of  2000 
through  June  30,  2001,  as  originally  proposed,  to  January  2, 
2001  through  June  30,  2001,  as  now  intended  and  reflected 
below: 

Budget  Analyst 
Proposed  Supplemental  Recommended       Recommended 

Appropriation  Request  Amount  Reductions 

Funding  Uses 

Permanent  Salary-Misc.  Reg.  (1375L  Special  Assistant  XVI) 
$62,184  $49,972  $12,212 

Fringe  Benefits 

$14.302  $11.494  $2,808 

Total 

$76,486  $61,466  $15,020 

4.  The  BOA  total  Temporary  Salaries  budget  for  Fiscal  Year 
2000-01  is  $15,684.  The  Budget  Analyst  notes  that  through 
December  8,  2000,  the  BOA  expended  $7,797  for  Temporary 
Salaries,  leaving  a  remaining  balance  of  $7,887  for 
Temporary  Salaries.  The  proposed  Supplemental 
Appropriation  includes  a  request  for  $20,919  of  additional 
Temporary  Salaries  funds. 

As  previously  noted,  the  requested  $20,919  of  Temporary 
Salary  funds  were  intended  to  pay  an  As-Needed  Senior 
Clerk  Typist,  to  increase  his  hours  from  part-time  (4  hours 
per  day)  to  full-time  (8  hours  per  day),  from  October  14,  2000 
through  June  30,  2001.  However,  according  to  Ms.  Avery,  two 
BOA  Senior  Clerk  Typists  recently  left  their  positions  at  the 
BOA,  including  the  one  As-Needed  Senior  Clerk  Typist,  who 
was  to  receive  the  proposed  increase  in  hours  under  the 
subject  Supplemental  Appropriation.  Ms.  Avery  advises  that 
one  permanent  Senior  Clerk  Typist  left  the  BOA  payroll  on 
December  8,  2000  and  the  other  Senior  Clerk  Typist,  who 
was  being  paid  with  the  Temporary  Salary  funds,  left  the 
BOA  payroll  on  December  20,  2000.    Ms.  Avery  hopes  to  fill 

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BUDGET  ANALYST 

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Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


those  two  positions  by  early  to  mid  February  of  2001. 
Currently,  according  to  Ms.  Avery,  the  BOA  has  only  one 
remaining  As-Needed  Senior  Clerk  Typist,  who  is  now 
working  four  hours  per  day. 

Given  that  the  requested  $20,919  was  originally  intended  to 
increase  a  part-time  Senior  Clerk  Typist  to  full-time  between 
October  14,  2000  and  June  30,  2001,  that  this  Temporary 
Senior  Clerk  Typist  position  was  vacated  on  December  20, 

2000,  and  that  another  Temporary  As-Needed  Senior  Clerk 
Typist  is  currently  assisting  the  BOA  four  hours  per  day,  the 
Budget  Analyst  estimates  that  the  BOA  needs  additional 
requested  Temporary  Salary  funds  of  $9,415  instead  of 
$20,919,  resulting  in  the  following  recommended  reductions: 

Budget  Analyst 
Proposed  Supplemental  Recommended       Recommended 

Appropriation  Request  Amount  Reductions 

Temporary  Salaries 

$20,919  $9,415  $11,504 

5.  The  BOA  total  Overtime  budget  for  FY  2000-01  is  $4,110. 
The  proposed  request  includes  $7,660  for  Overtime  funds  for 
the  period  from  September  18,  2000  through  June  30,  2001. 
However,  the  Budget  Analyst  notes  that  as  of  December  8, 

2001,  the  BOA  expended  a  total  of  $3,917  of  Overtime  funds! 
leaving  a  remaining  balance  of  $193. 

Since  December  8,  2000,  Ms.  Avery  advises  there  has  been 
only  one  BOA  hearing.  According  to  Ms.  Avery,  no  overtime 
expenses  were  incurred  at  that  BOA  hearing.  There  are  17 
hearings  currently  scheduled  for  the  remainder  of  the  fiscal 
year.  Based  on  discussions  with  Ms.  Avery,  assuming  an 
average  of  four  hours  of  overtime  are  required  per  hearing,  at 
an  hourly  rate  of  $39.36,  this  would  result  in  a  total 
remaining  overtime  cost  of  $2,676.  Therefore,  total  additional 
overtime  costs  of  $2,483  are  projected  for  the  balance  of  the 
fiscal  year  ($2,676  through  June  30,  2001  less  $193 
remaining  balance).  The  proposed  supplemental 
appropriation  for  Overtime  should  therefore  be  reduced  as 
follows: 


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BUDGET  ANALYST 

1~2 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 

Budget  Analyst 
Proposed  Supplemental  Recommended       Recommended 

Appropriation  Request  Amount  Reductions 

Overtime 

$7,660  $2,483  $5,177 

Recommendations:   1.     Amend     the     proposed     Supplemental     Appropriation 
ordinance  (File  00-1796)  as  follows: 


Proposed  Supplemental 
Appropriation  Reauest 

Recommended 
Amount 

Budget  Analyst 

Recommended 

Reductions 

Funding  Sources 

General  Fund  Reserve 
$105,065 

$73,364 

$31,701 

Funding  Uses 

Permanent  Salary-Misc.  Reg.  (1375L  Special  Assistant  XVT) 
$62,184                             $49,972                        $12,212 

Fringe  Benefits 
$14,302 

$11,494 

$2,808 

Temporary  Salaries 
$20,919 

$9,415 

$11,504 

Overtime 

$7,660 

$2,483 

$5,177 

Total 

$105,065 

$73,364 

$31,701 

2.  Approve  the  proposed  ordinance  (File  00-1796),  as 
amended,  and  approve  the  amendment  to  the  Annual  Salary 
Ordinance  (File  00-1797). 


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BUDGET  ANALYST 

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'  Memo  to  Finance  and  Labor  Committee 
January  17,  2001  Finance  and  Labor  Committee  Meeting 

Item  4  -  File  00-2087 


Department: 
Item: 


Amount: 
Source  of  Funds: 
Description: 


Assessor-Recorder's  Office 

Ordinance  appropriating  $1,245,909  from  the  General  Fund 
Reserve  to  fund:  (a)  litigation  and  mediation  expenses 
associated  with  the  Viacom  assessment  appeal  ($223,887),  (b) 
litigation  expenses  for  the  AT&T/TCI  assessment  appeal 
($215,000),  (c)  a  contract  with  KPMG  to  design  and  implement 
a  reengineering  plan  for  the  Assessor-Recorder's  Office  for 
Fiscal  Year  2000-01  ($726,726),  and  (d)  temporary  salaries  for 
customer  service  at  the  Assessor-Recorder's  Office  ($80,296). 

$1,245,909 

General  Fund  Reserve 

A.  Viacom  Assessment  Appeal 

The  proposed  supplemental  appropriation  of  $223,887  would 
fund  legal  and  related  expenses  already  incurred  for  the 
assessment  appeals  process  over  a  dispute  with  Viacom  Cable, 
Inc.  According  to  Ms.  Julie  Van  Nostern  of  the  City  Attorney's 
Office,  Viacom  initially  filed  an  appeal  with  the  Assessment 
Appeals  Board  in  1991,  contesting  both  the  assessed  value  of 
Viacom's  cable  signal  distribution  system  and  the  assessed 
possessory  interest  taxes1  owed  by  Viacom  to  the  City  for  the 
years  1987  through  1991.  Ms.  Van  Nostern  advises  that  the 
appeal  was  later  extended  to  include  the  years  1987  through 
1995.  According  to  Ms.  Van  Nostern,  Viacom  had  asked  for  a 
$23,000,000  refund  in  possessory  interest  taxes  paid  by 
Viacom  to  the  City  between  1987  and  1995.  However,  the  City 
maintained  that  the  requested  refund  should  be  approximately 
$12,000,000,  plus  accrued  interest,  for  excess  possessory 
interest  taxes  paid  by  Viacom  to  the  City  during  that  time. 

The  City  and  Viacom  agreed  to  mediate  the  dispute.  Following 
the  mediation,  the  parties  agreed  to  a  "Stipulation  for 
Reduction  in  Assessed  Values  for  1987-1995"  ("Stipulation"), 
and  submitted  the  Stipulation  to  the  Assessment  Appeals 
Board.  Ms.  Van  Nostern  advises  that  the  Assessment  Appeals 


1  Possessory  Interest  Taxes  are  levied  on  private  companies  that  use  publicly  owned  property.  In  this 
particular  instance,  the  City  assesses  possessory  interest  taxes  on  Viacom  Cable's  use  of  City  streets 
and  rights  of  way  to  provide  for  the  cable  company's  cable  distribution  system. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


14 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


Budget: 


Board  approved  the  Stipulation  on  September  13,  2000  and 
reduced  Viacom's  assessment  accordingly,  resulting  in  a 
refund  (including  interest)  to  Viacom  from  the  City  in  the 
amount  of  $19,967,286.  Attachment  I,  provided  by  the  City 
Attorney's  Office,  contains  a  summary  of  the  Stipulation. 
According  to  Mr.  Matthew  Hymel  of  the  Controller's  Office,  the 
City  paid  the  settlement  of  $19,967,286  in  FY  2000-01  using 
reserved  Property  Tax  funds  held  for  this  purpose. 

The  additional  costs  already  incurred  for  the  Viacom 
assessment  appeal  litigation  and  mediation  as  of  October  31, 
2000  are  as  follows: 


Viacom  Assessment  Appeal 

Litigation 

Mediation 

Total 

Berliner  and  Kidder, 

$13,835 

$13,835 

Appraiser  of  Intangible  Properties 

Diehl,  Evans  &  Company,  LLP, 

$8,563 

26,603 

35,166 

Auditor  of  Intangible  Properties 

Rutan  &  Tucker,  Representing  the  City  before 

13.166 

56,249 

69,415 

the  Assessment  Appeals  Board 

Freeland  Cooper,  Legal  Advice 

32,264 

32,264 

John  Clifford, 

13,750 

13,750 

Valuation  of  Possessory  Interest 

JAMS 

58,851 

58,851 

Private  Mediation  Services 

City  Attorney  Delivery  and  Copying  Costs 

606 

606 

Total 

$21,729 

$202,158 

$223,887 

Comments  on 
Viacom  Appeal: 


1.  Ms.  Bose  Onyemem  of  the  Assessor-Recorder's  Office  states 
that  the  Assessor-Recorder's  Office's  FY  2000-01  budget 
included  $100,000  to  pay  for  City  expenses  in  the  Viacom 
appeal  case.  According  to  Ms.  Onyemem,  as  of  December  20, 
2000,  the  Assessor-Recorder's  Office  had  expended  $52,410  of 
the  total  allocated  amount  of  $100,000,  leaving  a  balance  of 
$47,590.  Ms.  Onyemem  advises  that  the  Assessor-Recorder's 
Office  is  now  requesting  the  subject  supplemental 
appropriation  to  fund  $223,887,  which  the  City  already  owes  in 
incurred  expenses.  Because  the  proposed  $223,887 
supplemental  appropriation  would  fund  costs  that  have 
already  been  incurred  without  first  obtaining  Board  of 
Supervisors  approval,  the  Budget  Analyst  recommends  that 
the  proposed  ordinance  be  amended  to  provide  for  retroactive 
authorization.  In  addition,  because  the  Assessor-Recorder's 
Office   still  has   $47,590  in  its   FY  2000-01   budget   for  the 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

15 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


Viacom  case,  the  Budget  Analyst  recommends  that  the 
proposed  ordinance  be  amended  to  reduce  the  supplemental 
appropriation  request  for  costs  related  to  Viacom  by  $47,590 
from  $223,887  to  $176,297.  Ms.  Van  Nostern  does'  not 
anticipate  future  costs  related  to  the  Viacom  assessment 
appeal. 

2.  According  to  Ms.  Onyemem,  the  Board  of  Supervisors  has 
appropriated  a  total  of  $1,368,692  since  FY  1997-98  for 
litigation  and  mediation  costs  related  to  the  Viacom 
assessment  appeal.  Attachment  II,  provided  by  the  Assessor- 
Recorder's  Office,  contains  a  breakdown  of  the  Assessor- 
Recorder's  actual  costs  by  fiscal  year. 


Description:  B.  AT&T/TCI  Avveal  Litigation  Expenses 

On  July  31,  1996,  Telecommunications,  Inc.  (TCI)  acquired 
Viacom's  interest  in  the  City's  Cable  Television  franchise.  TCI 
was  subsequently  taken  over  by  AT&T  on  March  9,  1999. 
According  to  Ms.  Van  Nostern,  AT&T/TCI  has  appealed  its 
assessments  for  the  years  1996  through  1999  to  the 
Assessment  Appeals  Board,  contesting  the  assessed  value  of 
more  than  $200  million  in  property.  Ms.  Van  Nostern  advises 
that  the  parties  agreed  to  stay  these  appeals  pending 
resolution  of  the  Viacom  case  discussed  above,  but  that  either 
party  can  reinstate  the  appeals  on  270  days  notice,  meaning 
that  the  City  must  be  ready  to  prepare  and  present  its  case  in 
as  little  as  nine  month's  notice.  Ms.  Van  Nostern  advises  that 
the  City  Attorney's  Office  is  working  with  the  Assessor- 
Recorder's  Office  to  develop  an  assessment  strategy  for 
AT&T/TCI,  which  will  avoid  the  costly  litigation  associated 
with  the  Viacom  case. 

The  proposed  ordinance  would  appropriate  $215,000  to  fund 
the  estimated  costs  in  FY  2000-01  of  responding  to  the 
AT&T/TCI  legal  appeal.  Ms.  Van  Nostern  advises  that  because 
the  AT&T/TCI  assessment  appeal  is  a  new  case,  no  funds  were 
included  in  the  FY  2000-01  budget  for  the  Assessor-Recorder's 
Office,  and  no  funds  have  been  expended  on  this  case  in 
previous  fiscal  years. 


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BUDGET  ANALYST 

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Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


Budget: 


The    estimated    FY    2000-01    costs    for    the    AT&T/TCI 
assessment  appeal  process  are  as  follows: 


AT&T/TCI  Assessment  Appeal 

Estimated 
Costs 

Rutan  &  Tucker  —  Outside  Tax  Counsel 

320  hours  times  $225/hour 

$72,000 

Expenses 

13.000 

Subtotal 

$85,000 

Freeland  Cooper  —  Outside  Litigation/Mediation  Counsel 

65  hours  times  $295/hour 

19,175 

Expenses 

825 

Subtotal 

$20,000 

Diehl,  Evans  &  Company,  LLP  -  Valuation  of  Cable  Companies 

140  hours  times  $200/hour 

28,000 

Expenses 

7.000 

Subtotal 

$35,000 

John  Clifford  —  Valuation  of  Possessory  Interest 

310  hours  times  $225/hour 

69,750 

Expenses 

5.250 

Subtotal 

$75,000 

Total 

$215,000 

Comments  on 
AT&T/TCI  Case: 


1.  According  to  Ms.  Van  Nostern,  the  City  Attorney's  Office 
based  their  FY  2000-01  cost  estimates  for  the  AT&T/TCI 
assessment  appeal  process  on  the  hours,  legal  advice  and 
assessment  services  required  for  the  Viacom  assessment 
appeal  process  described  above.  Ms.  Van  Nostern  advises  that 
the  estimated  $215,000  in  costs  for  the  AT&T/TCI  case  during 
FY  2000-01  does  not  include  costs  for  mediation  or  for 
Assessment  Appeals  hearings,  should  they  be  necessary.  Ms. 
Van  Nostern  advises  that  if  mediation  or  hearings  are 
required,  the  Assessor-Recorder's  Office  will  include  funds  for 
legal  costs  in  the  department's  FY  2001-02  budget  request. 

2.  According  to  Ms.  Van  Nostern,  all  of  the  firms  listed  in  the 
above  budget  were  selected  on  a  sole  source  basis,  based  upon 
their  expertise  related  to  property  assessment  and  the  cable 
industry. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


17 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 

Description:  C.  Contract  with  KPMG  for  Reengineering  Plan 

The  proposed  supplemental  appropriation  for  $726,726  would 
expand  an  existing  $400,000  contract  with  KPMG  to  develop 
and  implement  a  reengineering  plan,  for  a  total  contract  cost 
of  $1,126,726,  for  the  Assessor-Recorder's  Office  for  Fiscal 
Year  2000-01.  This  reengineering  plan  analyzes  the 
department's  work  processes  in  order  to  identify  changes  the 
department  must  make  to  run  more  effectively.  Ms.  Onyemem 
advises  that  the  Assessor-Recorder's  Office  originally 
contracted  with  KPMG,  in  consultation  with  the  Mayor's  and 
Controller's  Offices,  in  June  of  2000  to  improve  efficiencies  in 
the  department.  KPMG  agreed  to  identify  and  re-engineer 
process  inefficiencies,  conduct  a  training  needs  assessment, 
provide  necessary  training,  improve  customer  service  and 
help  the  department  transition  into  a  new  computer  system. 
The  Assessor-Recorder's  Office  included  $400,000  in  its  FY 
2000-01  budget  for  this  KPMG  contract.  Ms.  Onyemem 
advises  that  the  Assessor-Recorder's  Office  negotiated  with 
the  Controller's  Office  to  include  this  $400,000  contract  within 
a  larger  City  contract  with  KPMG  (discussed  further  in 
Comment  No.  3  below). 

According  to  Ms.  Onyemem,  in  September  of  2000,  and  again 
in  October  of  2000,  the  Assessor-Recorder's  Office  requested 
that  KPMG  revise  and  expand  the  scope  of  its  work  plan  in 
the  three  ways  listed  below.  The  Budget  Analyst  notes  that 
the  Assessor-Recorder's  Office  did  have  authority  to  request 
from  KPMG  proposals  for  expanding  the  scope  of  the  existing 
$400,000  contract.  However,  the  Assessor-Recorder's  Office 
did  not  have  the  authority  to  finalize  the  expanded  contract 
discussed  below  without  first  obtaining  approval  from  the 
Board  of  Supervisors  of  this  subject  additional  appropriation 
of  $726,726. 

(1)  After  KPMG  and  the  Assessor-Recorder's  Office  agreed  to 
the  terms  of  the  original  $400,000  contract,  in  September  of 
2000  the  Assessor-Recorder's  Office  directed  KPMG  to  help 
manage  and  facilitate  the  reduction  of  the  department's 
backlog  in  processing  deeds,  a  priority  for  the  Assessor- 
Recorder's  Office.2  In  addition,  KPMG  proposed  to  expand 


2  According  to  Ms.  Onyemem,  the  Assessor-Recorder's  Office  experienced  a  total  backlog  of 
approximately  32,000  deeds  during  1999  and  2000.  Ms.  Onyemem  advises  that  the  transition  to  the 
department's  new  computer  system  delayed  the  processing  of  new  deeds.  The  Assessor-Recorder's 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

13 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


the  original  contract  to  provide  a  more  extensive 
reengineering  plan  and  performance  measures  for  the 
department.  The  proposed  expanded  work  plan  would 
expand  the  original  contract  by  $207,926,  from  $400,000  to 
$607,926. 

(2)  In  October  of  2000,  KPMG  agreed  to  expand  the  scope  of  its 
contract  with  the  Assessor-Recorder's  Office  for  additional 
fees  to  KPMG  of  $172,664,  which  would  increase  the 
contract  again  from  $607,926  to  $780,590.  This  expanded 
scope  focuses  on  developing  a  new  management  strategy 
and  reorganizing  the  department. 

(3)  Finally,  the  Assessor-Recorder's  Office  has  a  proposal  from 
KPMG  to  implement  the  reengineering  plan  at.  a  cost  of 
$346,136,  which  would  bring  the  total  cost  of  the  contract 
with  KPMG  to  $1,126,726. 

These  three  modifications  result  in  the  total  subject  request  of 
$726,726  in  additional  costs  for  the  contract  with  KPMG.  A 
summary  budget  for  the  total  proposed  contract  costs  of 
$1,126,726  with  KPMG  is  as  follows: 


SUMMARY 

Reengineering  Plan 
Original  Budget 
Expanded  Scope/Deed  Backlog 

$400,000 
207,926* 

Revised  Subtotal 

$607,926 

Expanded  Scope/Management  Plan 
Implementation  of  Reengineering  Plan 

172,664* 
346,136* 

Total  Contract  Costs 

$1,126,726 

*Total  of  $726,726,  which  is  the  subject  of  this  request. 

The  proposed  $726,726  supplemental  appropriation  would  fund: 
(a)  KPMG's  work  decreasing  the  backlog  in  processing  deeds 
($207,926),  (b)  the  expanded  scope  of  KPMG's  reengineering 
plan  for  the  department  ($172,664),  and  (c)  implementation  of 
the  reengineering  plan  ($346,136),  for  a  total  FY  2000-01 
contractual  services  costs  of  $1,126,726,  including  the  original 
budget  of  $400,000,  as  shown  in  the  table  above.  As  shown  in 
the  table  on  the  following  page,  the  hourly  rage  being  charged 
by  KPMG  ranges  from  $121.28  to  $281.14. 


Office,  with  the  assistance  of  KPMG,  is  now  working  to  correct  inaccurate  deed  information  and 
process  or  re-process  deeds  from  1999  and  2000. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

19 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


Budget  for 
Reengineering  Plan: 


The  budget  for  the  proposed  $1,126,726  contract  with 
KPMG,  including  the  subject  $726,726  supplemental 
appropriation,  is  as  follows: 


Contract  with  KPMG 

Hourly 

Number 

Total 

Rate 

of  Hours 

Reengineering  Plan 

Professional  Fees 

Managing  Director 

$281.14 

32 

8,997 

Project  Manager 

$165.38 

418 

69,129 

Senior  Consultants 

$148.84 

408 

60,727 

Consultants  . 

$148.84 

492 

73,229 

Analysts 

$148.84 

504 

75,016 

Sub-contractor 

Subtotal  Professional  Fees 

$121.28 

36 

4,366 

1,890 

$291,464 

Deed  Backlog  Completion 

Professional  Fees 

Managing  Director 

$281.14 

8 

2,249 

Project  Manager 

$165.38 

422 

69,790 

Senior  Consultants 

$148.84 

904 

134,551 

Analysts 

Subtotal  Professional  Fees 

$148.84 

144 

21,433 

1,478 

$228,023 

Total  Professional  Fees 

3,368 

519,487 

KPMG's  Other  Expenses* 

88,439 

**Subtotal  Reengineering/Backlog 

3,368 

$607,926 

Expanded  Scope/Management  Plan 

Professional  Fees 

Managing  Director 

$281.14 

240 

$67,474 

Project  Manager 

$165.38 

320 

52,922 

Senior  Consultants 

Subtotal  Professional  Fees 

$148.84 

200 

29,768 

760 

$150,164 

KPMG's  Other  Expenses 

22,500 

**Subtotal  Management  Plan 

760 

$172,664 

Estimates  for 

Implementation  of  Reengineering  Plan 

Professional  Fees 

Managing  Director 

$281.14 

200 

$56,228 

Project  Manager 

$165.38 

400 

66,152 

Senior  Consultants 

$148.84 

400 

59,536 

Analysts 

Subtotal  Professional  Fees 

$148.84 

800 

119.072 

1,800 

$300,988 

KPMG's  Other  Expenses 

45,148 

Subtotal  Implementation  Estimates 

1,800 

$346,136 

Total  KPMG  Contract 

5,928 

$1,126,726 

Less  $400,000  included  in  FY  2000-01  Budget 

(400,000) 

Total  Supplemental  Appropriation 

$726,726 

Other  Expenses  include  mileage,  parking,  meals  and  housing. 
*  Already  expended  or  incurred  (See  Comment  No.  1  below). 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 

Attachment  V,  provided  by  the  Assessor-Recorder's  Office, 
contains  an  explanation  for  how  KPMG  estimated  the 
$346,136  shown  in  the  budget  above  to  implement  the 
reengineering  plan. 

Comments  on 

Reengineering  Plan:  1.  Ms.  Onyemem  reports  that  as  of  October  of  2000,  the 
Assessor-Recorder's  Office  had  already  incurred  expenses  for 
$387,497  of  the  $400,000  included  in  the  department  FY 
2000-01  budget  for  the  KPMG  contract,  leaving  a  balance  of 
$12,503.  According  to  Ms.  Onyemem,  the  Assessor-Recorder's 
Office  has  continued  incurring  expenses  for  services  provided 
by  KPMG  since  October  of  2000,  although  the  Assessor- 
Recorder's  Office  is  unsure  of  the  exact  amount  of  these 
additional  fees  since  the  department  has  not  received  a  bill 
from  KPMG  since  October  of  2000.  The  Budget  Analyst  notes 
that,  according  to  Ms.  Onyemem,  KPMG  has  agreed  to 
complete  its  reengineering  plan  and  its  work  to  reduce  the 
deed  backlog  by  January  31,  2001,  at  which  time  the 
Assessor-Recorder's  Office  will  owe  to  KPMG  the  balance  of 
$393,093  for  these  two  projects  (the  $12,503  balance  of  funds 
included  in  the  department's  FY  2000-01  budget  for  the 
contract  with  KPMG,  $207,926  for  deed  backlog  reduction, 
and  $172,664  for  the  expanded  scope/  management  plan).  The 
Budget  Analyst  notes  that  the  Assessor's  Office  has  incurred 
these  additional  costs  of  up  to  $393,093  without  first 
obtaining  prior  appropriation  approval  by  the  Board  of 
Supervisors.  The  current  contract  with  KPMG  is  limited  to 
$400,000.  The  Assessor-Recorder's  Office  did  not  have  the 
authority  to  finalize  an  expanded  contract  with  KPMG 
without  first  obtaining  prior  appropriation  approval  by  the 
Board  of  Supervisors.  The  Budget  Analyst  recommends  that 
the  proposed  ordinance  be  amended  to  provide  for  retroactive 
authorization. 

2.  According  to  Ms.  Onyemem,  KPMG  has  agreed  to  complete 
the  proposed  contract  with  the  Assessor-Recorder's  Office, 
including  implementation  of  the  reengineering  plan,  by  June 
30,  2001.  Ms.  Onyemem  advises  that  KPMG  has  agreed  to  the 
fees  and  expenses  outlined  in  the  budget  above  at  a  maximum 
cost  of  $1,126,726.  If  KPMG  exceeds  the  allotted  hours  to 
complete   the   workplan,    as   agreed   upon   by   both   parties, 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

21 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


KPMG    will    not    charge     the    Assessor-Recorder's     Office 
additional  fees  for  those  hours. 

3.  According  to  Ms.  Onyemem,  the  Assessors  Office  negotiated 
with  the  Controller's  Office  to  include  the  original  $400,000 
contract  with  KPMG  within  a  larger  City  contract  with 
KPMG  in  order  to  begin  a  reengineering  of  the  department's 
business  practices  as  soon  as  possible.  According  to  Mr. 
Hymel  of  the  Controller's  Office,  these  services  are  included  in 
the  Controller's  City-wide  audit  contract  with  KPMG.  Mr. 
Hymel  advises  that  this  contract,  which  was  competitively  bid 
and  approved  by  the  Civil  Service  Commission  in  May  of 
1999,  allows  the  City  to  contract  with  KPMG  for  as  needed 
auditing  and  accounting  services.  The  contract  with  KPMG  is 
a  three-year  contract  with  two  one-year  renewal  options. 
According  to  Mr.  Hymel,  although  this  three-year  contract 
between  the  City  and  KPMG  does  not  specify  a  maximum 
dollar  amount,  the  Civil  Service  Commission  has  approved  a 
total  $7  million  for  the  City-wide  audit  contract.  Mr.  Hymel 
advises  that  to  date  the  Controller's  Office  has  expended 
approximately  $4  million  of  the  $7  million  contract,  not 
including  the  $387,497  already  incurred  from  the  original 
$400,000  contract  between  the  Assessor-Recorder's  Office  and 
KPMG.  Mr.  Hymel  advises  that  the  original  KPMG  contract 
for  the  Assessor-Recorder  is  limited  to  $400,000,  which  was 
included  in  the  FY  2000-2001  Assessor-Recorder  budget.  If 
approved  by  the  Board  of  Supervisors,  the  proposed 
supplemental  appropriation  would  increase  this  contract  with 
KPMG  by  $726,726,  for  a  total  in  contractual  services  costs  of 
$1,126,726. 


Description:  D.  Temporary  Salaries 


The  proposed  supplemental  appropriation  would  fund  $80,296 
in  Temporary  Salaries  to  help  improve  customer  service  at  the 
Assessor-Recorder's  Office.  Ms.  Onyemem  advises  that  the 
Assessor-Recorder's  Office  would  use  the  $80,296  to  hire  four 
temporary  employees  who  will  be  assigned  to  answering 
phone  calls  from  the  public  and  addressing  questions  and 
problems  posed  by  the  public.  Ms.  Onyemem  advises  that 
these  temporary  employees  would  allow  the  Assessor- 
Recorder's  Office  to  decrease  its  backlog  of  deed  processing 
and  respond  to  the  increase  in  customer  complaints  due  to 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


Budget: 


this  backlog,  as  stated  in  Attachment  VI,  provided  by  the 
Assessor-Recorder's  Office. 

The  budget  for  the  proposed  $80,296  supplemental 
appropiation  for  Temporary  Salaries,  for  the  period  from 
February  1,  2001  through  June  30,  2001,  is  contained  in  the 
table  below.  This  $80,296  supplemental  appropriation  would 
increase  the  department's  budget  for  Temporary  Salaries  from 
$20,808  to  $101,104. 


No.  ofFTE 
Positions 

Class 

Title 

Step  3 

Biweekly  Salary 

(Annual) 

Cost 

0.78 

1368 

Special  Assistant 

(2  positions,  for  10  pay  periods  each) 

$2,110 
($54,860  each) 

$42,428 

0.78 

8108 

Senior  Legal  Process  Clerk 

(2  positions,  for  10  pay  periods  each) 

$1,596 
($41,496  each) 

32,093 

Subtotal  Salaries 

$74,521 

Employer  Taxes 

5,775 

Total 

$80,296 

Comment  on 

Temporary 

Salaries: 


Ms.  Onyemem  advises  that  the  Assessor-Recorder's  Office  has 
modeled  its  proposed  improvements  to  customer  service  on 
improvements  implemented  in  the  Office  of  the  Treasurer/Tax 
Collector.  According  to  Ms.  Onyemem,  if  the  customer  service 
to  be  provided  by  the  proposed  temporary  employees  proves  to 
be  successful  in  addressing  customer  concerns,  the  Assessor- 
Recorder's  Office  may  request  permanent  positions  in  its 
budget  for  FY  2001-02. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 

Recommendations:       Viacom  Assessment  Appeal 


1.  Amend  tbe  proposed  ordinance  to  reduce  the 
supplemental  appropriation  request  for  costs  related  to 
Viacom  by  $47,590,  from  $223,887  to  $176,297,  in 
accordance  with  Comment  No.  1  in  the  section  above 
addressing  the  Viacom  assessment  appeal. 

2.  Amend  the  proposed  ordinance  to  provide  for  retroactive 
authorization  to  appropriate  $176,297  for  costs  previously 
incurred  without  first  obtaining  prior  appropriation 
approval  from  the  Board  of  Supervisors,  in  accordance  with 
Comment  No.  1  in  the  section  above  addressing  the  Viacom 
assessment  appeal. 

3.  Approve  the  proposed  supplemental  appropriation  of 
$176,297,  as  amended,  for  costs  resulting  from  the  Viacom 
assessment  appeal  process. 

ATT/TCI  Assessment  Appeal 

Approve  the  proposed  supplemental  appropriation  of 
$215,000  for  costs  resulting  from  the  AT&T/TCI  assessment 
appeal  process. 

KPMG  Contract  for  Reengineering  Project 

1.  Amend  the  proposed  ordinance  to  provide  for  retroactive 
authorization  to  appropriate  for  costs  previously  incurred 
without  first  obtaining  prior  appropriation  approval  from 
the  Board  of  Supervisors.  As  stated  in  Comment  No.  1  in  the 
section  above  addressing  the  proposed  contract  with  KPMG, 
the  Assessor-Recorder's  Office  has  been  incurring  expenses 
above  the  $400,000  originally  budgeted  for  the  KPMG 
contract  for  services  provided  by  KPMG  since  October  of 
2000,  however  the  department  is  unsure  of  the  exact 
amount  since  they  have  not  received  any  bills  from  KPMG 
since  October  of  2000. 

2.  Approval  of  the  proposed  ordinance,  as  amended,  is  a 
policy  matter  for  the  Board  of  Supervisors  because  the 
Assessor-Recorder's  Office  did  not  have  the  authority  to 
incur  such  costs  of  up  to  $393,093  above  the  $400,000 
originally  budgeted  for  the   KPMG  contract  without  first 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

Ik 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


obtaining  prior  appropriation  approval  from  the  Board  of 
Supervisors. 


Temporary  Salaries 

Approve     the     proposed     supplemental     appropriation     of 
$80,296  for  Temporary  Salaries. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Attachment  I 


Assessment  Appeals  Board  Stipulation 

Between  City  and  County  of  San  Francisco  and  Viacom 

for  Reduction  in  Assessed  Value  of  the  Possessory  Interest 

and  Business  Personal  Property 


EXECUTIVE  SUMMARY 


I.  Possessory  Interest 

The  Assessor's  original  $188  million  valuation  of  the  1987  Possessory  Interest 
was  San  Francisco's  portion  of  a  10-county  appraisal.  This  appraisal  utilized  a 
methodology  that  was  subsequently  invalidated  by  a  number  of  post-1991  California 
court  decisions.  Throughout  the  assessment  appeal  hearing,  the  Assessor  has 
acknowledged  the  need  to  revalue  the  Possessory  Interest  using  a  permissible  method. 
The  Assessor  used  an  income  method  appraisal,  which  resulted  in  a  1987  value  of  $106 
million.  Approximately  75%  of  the  combined  Possessory  Interest  value  reductions 
contained  in  the  Stipulation  directly  result  from  correcting  the  10-county  appraisal  to 
conform  to  the  new  court  cases.  The  remaining  Possessory  Interest  value  reductions 
relate  to  the  economic  recession  beginning  in  1991  and  the  re-regulation  of  the  cable 
industry  beginning  in  1992  which  resulted  in  forced  cable  rate  reductions. 


II.         Business  Personal  Property 

Three  categories  of  business  personal  property  are  the  subject  of  the  hearings: 
converters/descramblers,  the  cable  distribution  system  and  house  drops.  With  respect  to 
the  first  two  categories,  the  parties  presented  valuations  at  the  hearings  based  on  the 
"replacement  cost  new  less  depreciation"  method.  In  reaching  agreement  on  stipulated 
values,  the  parties  used  the  same  valuation  method,  adopting  inputs  as  to  original  cost, 
useful  lives  and  depreciation  that  fell  within  the  range  of  evidence  in  the  record  on  those 
issues.  The  Stipulation  treats  the  entire  house  drop  as  taxable  and  adopts  a  valuation 
approach  consistent  with  that  used  for  the  other  two  categories. 


III.        Conclusions 

All  valuations  contained  in  the  Stipulation  are  supported  by  substantial  evidence 
in  the  record  and  the  exhibits  to  the  Stipulation. 


Source:  City  Attorney's  Office 


Lio»AMm£r..^iun>m^1 


/ 


Attachment  II 


ASSESSOR-RECORDER 
VIACOM  LITIGATION 

Budget 
12/12/97-12/19/00 


Revised 
Budget  Supplemental Budget Encumbrance Actual  Balance 


FY  1997-98 

450,000 

450.000 

282.790 

167.210 

FY  1998-99 

250,000 

250,000 

375,100 

42.110 

FY  1999-00 

300,000 

284,887 

584,887 

3.440 

590.420 

33.137 

FY  2000-01 

100,000 

100.000 

120,382 

12.755 

1,100,000 

284,887 

1,384,887 

3,440 

1,368,692 

Source:  Assessor-Recorder's  Office 


Attachment  III 
Page  1  of  2 


KPMG  CONSULTING 
BUSINESS  PROCESS  REENGINEERING  PROJECT  CHRONOLOGY 

■  June  2000  -  KPMG  Consulting  is  retained  by  the  City  and  County  to  perform  a 
business  process  reengineering  (BPR)  review  of  the  Assessor-Recorder's  Office.  This 
project  is  to  begin  July  1,  2000. 

■  July  2000  -  KPMG  Consulting  initiates  the  BPR  project  on  or  about  July  1st.  Shortly 
after  the  project  is  initiated,  KPMG  Consulting  is  asked  by  the  Assessor-Recorder  and 
the  Mayor's  Office  to  refocus  their  efforts  on  the  deed  backlog.  At  this  time  all  BPR 
tasks  are  suspended  and  the  KPMG  Consulting  team  focuses  on  coordinating  the  deed 
backlog  effort. 


■ 


September  28,  2000  -  KPMG  Consulting  submits  a  revised  scope  of  work  to  the 
Assessor-Recorder  which:  , 

.     Adds  hours  and  cost  associated  with  the  coordination  of  the  deed  backlog 

.     Deletes  elements  (hours  and  cost)  of  the  original  BPR  project  to  mitigate  the 
financial  impact  to  the  City  and  County. 

October  18,  2000  -  Additional  items  are  added  to  KPMG  Consulting's  scope  by  the 
Assessor- Recorder's  Office  and  the  Mayor's  Office.  These  include  the: 

.     Review  of  day-to-day  management  and  operations  of  the  Assessor-Recorder's 
Office  with  recommendations  for  improvement. 

.     Development  of  a  revised  management  and  organization  structure  for  the 
Assessor-Recorder's  Office. 

.     Preparation  of  a  Project  Management  Plan  to  address  the  recommendations  of 
the  Management  and  Organization  and  Business  Process  Reengineering  Reports. 

October  31,  2000  -  KPMG  Consulting  transitions  the  monitoring  and  reporting  of  the 
deed  backlog  to  the  Assessor-Recorder's  Office  and  refocuses  on  the  BPR  project  (per 
the  September  28th  revision). 

November  1,  2000  -  The  Assessor- Recorder's  Office  requests  that  KPMG  Consulting 
provide  an  estimate  of  costs  to  provide  support  during  the  implementation  of 
recommendations  (February  1,  2001  -  June  30,  2001). 

November  20,  2000  -  KPMG  Consulting  submits  the  "As-Is  Process  Flows",  the  first  of 
the  BPR  project  deliverables,  to  the  Assessor-Recorder's  Office  Project  Steering 
Committee. 

Source:    Assessor-Recorder's   Office 


kM&  Consulting  A  1 


Attachment  III 
Page  2  of  2 


KPMG  CONSULTING 
BUSINESS  PROCESS  REENGINEERTNG  PROJECT  DELIVERABLES 

■  Business  Process  Reengineering  deliverables  include: 

.  "As-Is  Process  Flows"  -  November  20,  2000  (Completed) 

.  "To-Be  Process  Flows"  -  January  5,  200 1 

.  Draft  Report  of  Recommendations  -  January  1 5,  200 1 

.  Final  Report  of  Recommendations  -  January  3 1 ,  200 1 

■  Coordination  of  Deed  Backlog  Effort  included  the  following  deliverables  (through 
October  3 1,2000): 

.     Facilitation  of  daily  status  meetings  (Completed) 

.     Daily  production  reports  (Completed) 

.     Daily  quality  assurance/control  reports  (Completed) 

.     Daily  issue  log  (Completed) 

.     Development  of  deed  processing  process  flows  (for  use  as  an  interim  process 

only)  (Completed) 
.     Development  of  quality  assurance/control  process  flows  (Completed) 
.     Monthly  status  updates  to  Assessor-Recorder,  Tax  Collector,  Controller,  and 

Mayor's  Office  (Completed). 

■  Management  and  Organization  Project  deliverables  include: 

.  Draft  Report  of  Recommendations  -  January  1 5,  200 1 

.  Draft  Project  Management  Plan- January  15,  2001 

_  Final  Report  of  Recommendations- January  31,  2001 

.  Final  Proj  ect  Management  Plan  -  January  3 1 ,  200 1 

■  Implementation  Support  deliverables  will  be  determined  when  project  scope  and 
approach  is  finalized  on  or  about  February  1,  2001. 


WJ& 


Consulting 


Attachment  IV 
Page  1  of  2 


Source:  Assessor-Recorder's  Office 

December  19,  2000 

TO:  Budget  Analyst 

FROM:  Bose  Onyemem 

RE:  Request  for  Supplemental  -KPMG 


Reengineering  Project-Attachment 

1.    Describe  the  project  both  development  and  implementation 
Development — KPMG  will  establish  a  comprehensive  public  service  unit  -: 

•  identify  inefficient  processes 

•  develop  solutions  for  improvements 

•  document  "as  is  "  processes 

•  research  best  practices 

•  identify  and  train  staff 

•  review  and  refine  job  classifications, 

•  identify  and  recommend  facilities  enhancement, 

•  establish  performance  measures  and 

•  monitor  results. 

Implementation-KPMG  will  implement  process  improvement  plan 

•  conduct  a  training  needs  assessment 

•  provide  necessary  training 

•  implement  changes  and  monitor  performance 

•  transfer  knowledge  to  selected  Assessor-Recorder  resources 

•  develop  recommendations  for  additional  staff  development 

a)    How  much  was  originally  budgeted  for  the  entire  project? 

•      Original  estimate  by  KPMG  for  reengineering  was  for  2800  hours  at  $477,895, 
(399,820-professional  fees  and  $78,075  other  expenses),  however  the 
department  only  has  a  funding  allocation  of  $400,000  in  the  budget. 

What  is  the  new  total  project  costs? 

Hours    Professional       Other 


Fees 

Expenses 

Total 

Reengineering/Deed  Backlog 

3,368 

$519,487 

$88,439 

$607,926 

Expanded  scope 

760 

150,164 

22,500 

172,664 

Implementation  -estimate 

1.800 

300.988 

45.148 

346.136 

5,928 

970,639 

156.087 

1.126.726 

2     Why  do  you  need  the  funds  you  are  requesting,  in  addition  to  the  money  that  was 
already  2000-01? 

•  Rengineering/Deed  Backlog  $607,926  Will  be  completed  by  1/31/2001 

•  Expanded  scope  172.664 

•  Total  Expenses  780,590 

•  Available  per  budget  400,000 


-ME00014.doc 


?n 


Attachment    IV 
Page    2   of    2 


•  Current  deficit  380,590 

•  Estimate-Implementation  346.136 

•  Amount  required  $726,726 

3.  State  why  you  need  KPMG  to  implement  the  program,  rather  than  the  Assessor's 
office  doing  it  themselves.  - 

•  To  provide  a  more  objective  analysis  of  best  practices  and  implement  successfully,  it's  more 
prudent  to  bring  in  an  independent  consultant  with  diverse  skills  in  government 
reengineering  process 

4.  State  how  you  selected  KPMG. ..why  are  you  using  an  existing  contract  between 
The  Controller  and  KPMG,  rather  than  undergoing  your  own  RFP/Contract  process. 

•  Since  the  Controller  already  has  a  City  certified  contract  with  KPMG  coupled  with  the  time 
frame  constraint  to  start  the  reengineering  process  in  July  2000  and  resolve  the  assessment 
roll  backlogs,  it  was  more  expedient  and  prudent  to  use  the  controller  certified  contract 
rather  than  wait  through  the  4  months  approval  process  for  consulting  service. 

6.     Have  you  expended  any  Assessor's  Office  staff  time  or  other  department  funds 
for  this  project.   If  so,  how  much  have  you  spent  and  how  much  was  budgeted  in  FY 
2000-01  for  this  use  (include  details  in  the  budget  requested  below). 

• 

•  No 

Please  provide  a  detailed  budget  of  the  entire  reengineering  project,  which  includes: 
a)  Details  for  how  you  spent  the  approximate  $400,000  already  budgeted  for  the 

Reengineering  Project 


Professional 

Other 

Month 

Hrs 

Fees 

Expenses 

Total 

•      July 

521 

$79,382 

7,180 

86,562 

•      August 

520 

80,440 

9,364 

89,804 

•      September 

472 

74,090 

10,313 

84.4031 

•      Octobe  r 

673 

107.694 

19.034 

126.728 

. 

2.177 

341.606 

45.891* 

387.497 

"Other  expenses  incl 

ude 

■      Daily  per  diem  rates  - 

I 

Lodging-$158.00 

I 

Food 

46.00 

Average  dail\ 

r  parkinc 

j  fees 

14.00 

Mileage  is  billed  at  .325. mile 


b)  KPMG:  Hourly  fees  charged,  around  and  kind  of  staffing  to  be  provided 

•  Sub-contractor  $121.28/hr. 

•  Senior  Consultants  148.84/hr. 

•  Project  Manager  165.38/hr. 

•  Managing  Director  281.14/hr. 

c)  Details  for  any  Assessor  staff  time  or  other  costs  (if  staff  time  has  been  used, 
include  classifications  and  salaries) 

•  None 


-ME00014.doc 


,  x  Attachment  V 

■  ■■■  Pase    1    of    2 


Consulting 


400  Capitol  Mail,  Suite  800  Telephone  916  554-1114  Fax  916  551  3030 

Sacramento,  CA  95814 


November  1,  2000 


Ms.  Bose  Oneyeman 
Assessor-Recorder's  Office 
City  and  County  of  San  Francisco 
City  Hall 

1  Dr.  Carlton  B.  Goodlett  Place 
San  Francisco,  CA  94102-4694 

Dear  Ms.  Oneyeman: 

KPMG  Consulting  is  pleased  to  present  you  with  our  estimate  of  the  professional  fees  and 
expenses  associated  with  the  implementation  of  the  Business  Process  Reengineering  (BPR) 
study. 

Background 

KPMG  Consulting  is  currently  engaged  in  conducting  a  BPR  study  for  the  City  and  County  of 
San  Francisco's  Assessor- Recorder's  Office.  Per  our  revised  scope  of  work  dated  September  28, 
2000,  KPMG  Consulting  anticipates  completing  the  BPR  study,  including  the  creation  of  a 
customer  service  unit,  in  January  2001.  We  have  been  asked  to  provide  the  City  and  County  of 
San  Francisco  with  an  estimate  of  the  professional  fees  and  expenses  associated  with 
implementing  the  recommendations  made  in  the  BPR  study. 

Proposed  Implementation  Schedule  and  Costs 

Based  on  our  prior  experience  with  similar  implementation  engagements,  we  estimate  it  will  take 
approximately  1,800  hours  of  staff  time  to  assist  the  Assessor-Recorder's  Office  with  the 
implementation  of  the  BPR.  Given  our  plan  to  complete  the  BPR  study  in  January  2001,  we 
anticipate  implementation  beginning  on  February  1,  2001  and  concluding  on  June  30,  2001. 
Based  upon  current  contracted  rates  with  the  City,  we  estimate  we  can  assist  the  Assessor- 
Recorder's  Office  with  the  implementation  of  the  BPR  study  for  a  total  of  $346,136.  This 
includes  $300,988  in  professional  fees  and  $45,148  in  expenses.  Exhibit  1  on  the  following 
page  shows  the  estimated  staffing  plan,  by  month,  as  well  as  the  City  approved  rates  effective 
through  06/30/01. 


KPMG  Consuttng.  UC-  KPMG  C«m«r>g.  LLC  is  )  iubvdxy  d 


J55SP 


Consulting 


Attachment   V 
Page    2   of    2 


Ms.  Bose  Oneycman 

City  and  County  of  San  Francisco 

November  1.  2000 


Exhibit  1:  Hours  by  Month 

Month 

Managing 
Direcior 
(O'Neill/ 

Pierce) 

Manager 
(Rohxbach) 

Senior 
Consultant 
(Chatters) 

Analyst 
(Anderson) 

Total 

February 

40 

80 

80 

200 

400 

March 

40 

80 

80 

200 

400 

April 

40 

80 

80 

150 

350 

May 

40 

80 

80 

150 

350 

June 

40 

80 

80 

100 

300 

Total  Hours 

200 

400 

400 

800 

1,800 

Rate  per  Hour 

$281.14 

$165.38 

$148.84 

$148.84 

Total  Professional  Fees 

$56,228 

$66,152 

$54,536 

$119,072 

S300,988 

KPMG  Consulting  will  provide  the  Assessor-Recorder's  Office  with  a  detailed  implementation 
plan  in  December  2000.  Should  you  have  any  questions  or  concerns,  please  do  not  hesitate  to 
contact  me  at  415-554-5657. 

Very  truly  yours, 
KPMG  Consulting  LLC 


V.&A- 


Micaela  V.  Ochoa 
Manager 


-"■•  Attachment  VI 

Source:  Assessor-Recorder's  Office 

December  19,  2000 

TO:  Budget  Analyst 

FROM:  Bose  Onyemem 

RE:  Request  for  Supplemental  -Temporary  Salaries 


Annual 
Salary 
Step  3  Cost 

1 .  Special  Assistant  IX,  Class  1 368 

(.39  FTE,  2  positions  at  $2,110  B/W  for  1 0.833  pay  periods)  $54,860  $42,428 

Senior  Legal  Process  Clerk  Class  8108 

(.39  FTE,  2  positions  at  $1,596  B/W  for  10.833  pay  periods)                41,496  32,093 

Subtotal  Salaries  $74,521 

Employer  Taxes  5,775 

Total  $80,296 

2.  What  the  employees  will  be  doing  (describe  duties  for  each  classification) 
8108-Senior  Legal  Process  Clerks  will  respond  to  customer's  complaints  in  a  courteous,  prompt  and 
efficient  manner  within  one  working  day.  Research  computer  information  for  Assessor-Recorder  parcels 
and  deeds  and  provide  prompt  and  accurate  information  to  the  public. 

1368-Special  Assistant  IX-  Under  general  administrative  direction,  coordinate  prompt  and  accurate 
response  to  taxpayers.  Ability  to  work  under  pressure  and  deal  effectively,  courteously  and  efficiently 
with  the  public.  Ability  to  work  and  make  independent  decisions  Extensive  knowledge  of  Assessor- 
Recorder  operations  is  required.  Ability  to  speak  English,  Spanish  /Chinese. 

3.  Why  do  you  need  them?. 

There  has  been  an  increase  in  the  number  of  complaints  by  the  public  over  the  use  of  voice  mail  to 
address  questions.  In  order  to  promote  good  public  relations  and  earn  overall  positive  response  of  at 
least  80  percent  from  taxpayers,  it  is  important  that  the  Office  of  the  Assessor-Recorder  maintains  a 
customer  section  with  staff  ready  to  address  taxpayers/public  concerns  efficiently  and  promptly 
The  Customer  service  section  will  be  modeled  after  the  Tax  Collector's  Customer  Service  section 

4.  Why  did  you  not  request  them  in  your  budget  request  for  FY  2000-01 

During  the  budget  preparation  phase  of  FY  2000-01 ,  the  department  was  already  negotiating  with 
KPMG  to  establish  an  effective  office  operation  and  improved  customer  service  .  The  department 
decided  to  wait  for  the  KPMG  recommendation  before  implementation. 

5.  How  much  you  have  budgeted  in  FY  2000-01  for  Temporary 

$20,808  budgeted  to  fund  temporary  employees  needed  to  clear  the  assessment  rolls  backlog. 

How  much  have  you  spent  on  Temporary  Salaries  to  date. 

Nothing 

6.  Explain  why  you  will  no  longer  need  the  employees  after  the  end  of  this  fiscal  year. 

The  positions  are  funded  for  5  months  in  the  current  fiscal  year.  The  positions  may  be  included  in  FY 
2001-2002  budget  request  pending  the  outcome  of  KPMG  reengineering  recommendation. 


-ME00014.doc 


Memo  to  the  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 

Items  5  and  6  -  Files  00-2184  and  00-2183 


Department: 
Items: 


Amount: 
Source  of  Funds: 

Description: 


Department  of  Child  Support  Services 

File  00-2184:  Ordinance  appropriating  $839,562  to 
implement  a  new  State-required  Customer  Service  Unit, 
including  the  creation  of  two  new  investigator  positions 
and  related  operating  costs  at  the  Department  of  Child 
Support  Services. 

File  00-2183:  Ordinance  amending  the  Annual  Salary- 
Ordinance  for  Fiscal  Year  2000-01  (Ordinance  No.  181-00) 
reflecting  the  creation  of  two  new  positions  in  the 
Department  of  Child  Support  Services. 

$839,562 

The  entire  $839,562  supplemental  appropriation  would  be 
funded  by  State  and  Federal  monies,  administered  by  the 
State  Department  of  Child  Support  Services. 

California  Family  Code  Section  17304,  signed  into  law  in 
1999,  required  all  counties  in  California  to  create  a 
separate  Department  of  Child  Support  Services,  which 
would  be  independent  from  other  local  departments  and 
report  directly  to  the  new  State  Department  of  Child 
Support  Services  (the  "State").  In  San  Francisco,  the  new 
City  Department  of  Child  Support  Services  began 
functioning  independently  on  July  1,  2000.  Previously, 
child  support  services  had  been  provided  by  the  Family 
Support  Bureau,  a  division  of  the  District  Attorney's 
Office.  According  to  Mr.  Merlin  Zimmerly  of  the 
Department  of  Child  Support  Services,  the  department's 
budget  is  funded  entirely  by  State  and  Federal  funding,  a 
requirement  of  the  State  law  mandating  separation  of  the 
Family  Support  Bureau  from  the  District  Attorney's 
Office. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  the  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


File  00-2184:  The  proposed  ordinance  would  appropriate 
$839,562  to  support  both  operating  costs  and  the 
implementation  of  a  State-required  new  Customer  Service 
Unit. 

The  Department  of  Child  Support  Services  would  use  the 
proposed  $839,562  supplemental  appropriation  as  follows: 

Customer  Service  Unit  ($335.316) 

According  to  Mr.  Zimmerly,  the  State  law  mandating  an 
independent  department  for  Child  Support  Services  also 
required  that  each  such  department  create  a  Customer 
Service  Unit  by  January  1,  2001.  Mr.  Zimmerly  advises 
that  the  Customer  Service  Unit  will  conduct  outreach  to 
inform  the  public  of  services  provided  by  the  department,  • 
work  to  make  child  support  programs  more  accessible, 
address  citizen  complaints,  and  work  to  make  the  court 
process  more  understandable  and  comfortable  for 
participants  in  child  support  programs.  Attachment  I, 
provided  by  the  Department  of  Child  Support  Services, 
contains  the  $335,316  spending  plan  submitted  to  and 
approved  by  the  State. 

Attachment  II,  provided  by  the  Department  of  Child 
Support  Services,  contains  an  explanation  of  the  staffing 
at  the  new  Customer  Support  Unit,  including  a 
justification  for  the  two  new  investigator  positions.  In 
addition  to  the  requested  two  new  investigator  positions 
described  below,  the  staff  of  the  new  Customer  Service 
Unit  will  also  consist  of  three  existing  ombudsman 
positions,  for  a  total  of  five  positions.  According  to  Mr. 
Zimmerly,  the  one  existing  investigator  position  of  the 
Department  of  Child  Support  Services  is  currently 
performing  customer  services  functions  in  order  to  meet 
the  January  1,  2001  State  mandate. 

Work  Order  to  Sheriffs  Department  ($144.945) 
The  Department  of  Child  Support  Services  requires  that 
two  security  guards  be  stationed  at  the  department's  front 
door  to  operate  a  metal  detector  and  to  remove  any 
weapons  brought  into  the  office  by  clients.  In  addition,  as 
part  of  the  department's  investigations  of  absent  parents, 
the  department  must  have  access  to  criminal  justice 
records    stored    in    the     California    Law     Enforcement 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


IS 


Memo  to  the  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


Telecommunications  System  (CLETS),  which  can  only  be 
operated  by  peace  officers  according  to  State  law. 
Therefore,  the  proposed  supplemental  appropriation 
would  fund  a  $144,945  work  order  to  the  Sheriffs 
Department  to  obtain  the  services  of  two  new  8304 
Deputy  Sheriff  positions.  The  two  new  Deputy  Sheriffs 
would  alternate  between  providing  security  at  the 
department's  front  door  and  using  the  CLETS  terminal  to 
access  criminal  justice  records. 

Ms.  Zimmerly  advises  that  the  department  currently  has 
two  permanent  8204  Institutional  Police  Officer  positions 
providing  security  at  the  department,  but  that  such 
Institutional  Police  Officers  are  not  authorized  by  the 
State  to  access  criminal  justice  records  through  the  • 
CLETS  system.  Mr.  Zimmerly  advises  that  the 
department  plans  to  request  a  reclassification  of'  the 
existing  two  8204  Institutional  Police  Officer  positions  to 
Investigator  positions.1 

Correct  a  Technical  Error  which  Resulted  in 
Underbudgeting  ($98,856) 

Mr.  Zimmerly  advises  that  the  State  approved  $118,000 
for  Other  Current  Expenses,  which  the  Department  of 
Child  Support  Services  included  in  its  FY  2000-01  budget 
request.  During  budget  preparation,  this  amount  was 
inadvertently  reduced  by  $98,856  to  $19,144.  The 
proposed  supplemental  appropriation  of  $98,856  for  Other 
Current  Expenses  would  correct  this  underbudgeting 
error  and  restore  the  originally  budgeted  amount  of 
$118,000.  As  stated  previously,  this  $118,000  for  Other 
Current  Expenses  has  already  been  approved  by  the  State 
for  Fiscal  Year  2000-01. 


1  According  to  Mr.  Zimmerly,  the  Department  of  Child  Support  Services'  FY  1999-2000  budget 
included  two  entry-level  exempt  investigator  positions  to  both  serve  as  security  guards  and  to 
operate  the  CLETS  computer  terminals.  However,  Mr.  Zimmerly  reports  that  the  State  law 
requiring  an  independent  Department  of  Child  Support  Services  removed  the  department's 
authority  to  directly  employ  Peace  Officers.  As  a  result,  in  the  FY  2000-01  budget  for  the 
Department  of  Child  Support  Services,  the  two  exempt  Peace  Officer  positions  were  reclassified  as 
8204  Institutional  Police  Officer  positions.  According  to  Mr.  Zimmerly,  although  the  State  allows 
the  Department  of  Child  Support  Services  to  hire  such  8204  Institutional  Peace  Officers,  the  State 
Penal  Code  does  not  authorize  these  positions  to  operate  CLETS  terminals,  a  service  needed  by  the 
department  to  access  criminal  justice  records. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  the  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


CASES  Consortium  ($254,445) 

According  to  Mr.  Zimmerly,  the  State  selected  the  City's 
Computer  Assisted  Support  Enforcement  System 
(CASES),  which  tracks  non-custodial  parents  required  to 
pay  child  support,  as  the  database  system  to  be  used  by 
33  other  counties  in  California.  Mr.  Zimmerly  advises 
that  the  State  has  requested  that  the  Department  of 
Child  Support  Services  act  as  the  fiscal  agent  for  the 
CASES  Consortium  to  contract  with  a  private  computer 
consulting  firm  to  install  CASES  in  the  33  CASES 
Consortium  counties.  Mr.  Zimmerly  reports  that  this 
consulting  firm,  named  Informatix,  Inc.  was  selected 
through  a  competitive  bidding  process  for  a  two-year 
contract  with  three  one-year  extensions.  The  proposed 
$254,445  for  the  CASES  system  would  fund  $163,020  for  - 
additional  services  to  modify  the  CASES  system  to 
produce  a  new  financial  report  required  by  the  State 
(hourly  rate  charged  by  Informatix  of  $110  for  1,482 
hours)  and  $82,280  for  assistance  to  be  provided  to 
Monterey  and  Merced  Counties  ($110  hourly  rate  times 
748  hours). 

The  supplemental  appropriation  would  also  fund  $9,145 
in  services  already  provided  to  Glenn  County  directly  by 
the  Department  of  Child  Support  Services  ($4,875  for 
Department  of  Child  Support  Services  staff  to  travel  to 
Glenn  County  and  $4,270  for  temporary  rental  of 
computers). 

City  Intranet  Services 

In  becoming  an  independent  department,  the  Department 
of  Child  Support  Services  must  become  connected  to  the 
City's  Intranet/Email  system.  According  to  Mr.  Zimmerly, 
the  State  has  provided  a  separate  allocation  to  fund  the 
costs  of  this  connection,  which  is  included  in  the  proposed 
supplemental  appropriation. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  the  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


File  00-2183:  The  proposed  ordinance  would  amend  the 
Annual  Salary  Ordinance  for  Fiscal  Year  2000-01  to 
create  the  following  two  new  permanent  positions  in  the 
Department  of  Child  Support  Services: 


No.  of 

FTE 

Positions 

Class 

Title 

Stepl 

Biweekly  Salary 

(Annual) 

Step  5 

Biweekly-Salary 

(Annual) 

1.0 

8160 

Assistant  Chief  Family 
Support  Investigator 

$2,221 
($57,968) 

$2,779 
($72,532) 

1.0 

8158 

Family  Support  Investigator  II 

$1,710 
($44,631) 

$2,130 
($55,593) 

According  to  Mr.  Zimmerly,  the  proposed  two  new 
investigator  positions  would  help  to  staff  the  new 
Customer  Service  Unit  discussed  above,  at  a  total 
annualized  cost  of  $160,256.  The  annualized  cost  of  the 
Assistant  Chief  Family  Support  Investigator  at  Step  5 
would  be  $90,765,  including  $72,532  in  Salary  and 
$18,233  in  Mandatory  Fringe  Benefits.  The  annualized 
cost  of  the  Family  Support  Investigator  II  at  Step  5  would 
be  $69,491,  including  $55,593  in  Salary  and  $13,898  in 
Mandatory  Fringe  Benefits. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  the  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


Budget: 


A  budget  for  the  proposed  supplemental  appropriation  of 
$839,562  is  shown  in  the  table  below: 


Budget 

Customer  Services  Unit  (See  Attachment  I) 

One-time  Set-up  Costs 

$80,000 

Operating  Costs 

148,546 

Personnel 

8160  Asst.  Chief  Family  Support  Investigator  (0.67  FTE,  8  months) 

48,354 

8158  Family  Support  Investigator  II  (0.67  FTE,  8  months) 

37,062 

Fringe  Benefits  (25  percent) 

21.354 

Subtotal  Personnel 

$106,770 

Subtotal  Customer  Services  Unit 

$335,316 

Work  Order  to  Sheriffs  Department 

144,945 

Inadvertent  Underbudgeting 

98,856 

City  Intranet  Connection 

6,000 

CASES  Consortium 

Fiscal  Agent  for  Upgrade  to  Meet  New  Reporting  Requirements 

163,020 

Assistance  to  Merced  and  Monterey  Counties 

82,280 

Assistance  to  Glenn  County 

9.145 

Subtotal  CASES  Consortium 

$254,445 

Total  Supplemental  Appropriation 

$839,562 

Comments: 


1.  According  to  Mr.  Zimmerly,  the  Department  of  Child 
Support  Services  plans  to  fill  the  proposed  two  new 
positions  (Assistant  Chief  Family  Support  Investigator 
and  Family  Support  Investigator  II)  for  the  five-month 
period  from  February  1,  2001  through  June  30,2001. 
However,  the  spending  plan  included  in  Attachment  I, 
provided  by  the  Department  of  Child  Support  Services, 
budgets  the  two  new  positions  for  eight  months 
(November  through  June)  in  FY  2000-01,  rather  than  the 
actual  five  months  that  the  department  will  employ  the 
new  employees  (February  through  June)  in  FY  2001. 
Therefore,  the  proposed  supplemental  appropriation  of 
$106,770  for  new  personnel  should  be  reduced  by  $40,039 
to  $66,731  to  reflect  the  actual  number  of  months  the  new 
employees  will  be  employed  in  FY  2000-01.  This  proposed 
reduction  includes  a  reduction  of:  (a)  $32,031  in  Salaries, 
from  $85,416  to  $53,385,  and  (b)  $8,008  in  Mandatory 
Fringe  Benefits,  from  $21,354  to  $13,346.  A  summary  of 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  the  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


the  recommend  reductions  is  contained  in  the  following 
table: 


Title 

Annual  Salary 

Budgeted 

Salary 
(8  months) 

Corrected 
Budgeted 

Salary 
(5  months) 

Proposed 
Reduction 

8160  Assistant  Chief  Family 
Support  Investigator 

$72,532 

$48,354 

$30,221 

$18,133 

8158  Family  Support  Investigator  II 

55,593 

37,062 

23,164 

13,898 

Subtotal  Salaries 

$128,124 

$85,416 

$53,385 

$32,031 

Fringe  Benefits  (25  percent) 

21,354 

13,346 

8,008 

Total 

$106,770 

$66,731 

$40,039 

2.  Ms.  Jean  Mariani  of  the  Sheriffs  Department  advises 
that  the  Sheriffs  Department  will  train  two  new  Deputy 
Sheriffs  to  fill  the  two  positions  needed  at  the  Department 
of  Child  Support  Services.  Therefore,  the  proposed 
$144,945  work  order  to  the  Sheriffs  Department  includes 
one-time  costs  of  $61,000  for  acquiring  two  new  Deputy 
Sheriffs,  including  $54,000  for  training  and  $7,000  for  the 
cost  of  new  uniforms  and  radios.  As  stated  in  Attachment 
III,  provided  by  the  Sheriffs  Department,  the  two  new 
Deputy  Sheriffs  will  not  complete  training  until  July  of 
2001.  For  the  rest  of  this  fiscal  year,  the  Sheriffs 
Department  will  staff  the  two  positions  at  the 
Department  of  Child  Support  Services  with  two  existing 
Deputy  Sheriff  positions,  beginning  in  March  of  2001  for 
the  four-month  period  between  March  1,  2001  and  June 
30,  2001.  However,  the  proposed  work  order  from  the 
Department  of  Child  Support  Services  to  the  Sheriffs 
Department  budgets  the  two  positions  for  six  months 
each.  Therefore,  the  proposed  $144,945  for  the  work  order 
to  the  Sheriff  Department  should  be  reduced  by  $18,686 
to  $126,259  to  reflect  the  actual  number  of  months  of  the 
work  order.  The  reduced  amount  of  $126,259  includes  the 
total  $120,968  shown  in  the  budget  for  the  four-month 
period  beginning  March  1,  2001,  included  in  Attachment 
IV  provided  by  the  Sheriffs  Department,  which  includes 
overtime  costs  of  $2,645.  The  reduced  amount  of  $126,259 
also  includes  an  additional  $5,291  in  possible  over  time 
costs,  as  discussed  in  Attachment  III,  provided  by  the 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  the  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


Sheriffs  Department.2  Mr.  Zimmerly  advises  that  the 
annualized  cost  of  the  work  order  in  FY  2001-02,  less  the 
one-time  costs,  would  be  $168,536. 

3.  As  stated  previously,  the  Department  of  Child  Support 
Services  currently  has  two  filled  8204  Institutional  Police 
Officers  providing  security  at  the  department's  front  door, 
which  will  be  replaced  by  the  two  Deputy  Sheriffs  funded 
by  the  subject  $144,945  work  order  from  the  Department 
of  Child  Support  to  the  Sheriffs  Department.  According  to 
the  State  Penal  Code,  the  two  Institutional  Peace  Officer 
positions  are  not  permitted  to  access  the  California  Law 
Enforcement  Telecommunications  System  (CLETS). 
Therefore,  according  to  Mr.  Zimmerly,  the  department 
plans  to  request  a  reclassification  of  the  existing  two  8204  ■ 
Institutional  Police  Officer  positions  to  two  Investigator 
positions.  The  Budget  Analyst  notes  that:  (a)  once  the  two 
Deputy  Sheriffs  replace  the  two  existing  8204 
Institutional  Police  Officer  positions  the  department  will 
no  longer  need  the  two  existing  positions,  and  (b)  the 
department  has  not  sufficiently  demonstrated  its  need  for 
reclassifying  the  two  existing  8204  Institutional  Police 
Officer  positions  into  two  Investigator  positions.  Since  the 
two  existing  8204  Institutional  Police  Officer  positions  are 
currently  filled,  the  Budget  Analyst  recommends  that  the 
proposed  ordinance  be  amended  to  require  the 
Department  of  Child  Support  Services  to  eliminate  the 
two  8204  Institutional  Police  Officer  positions  as  soon  as 
each  position  becomes  vacant. 

4.  As  stated  previously,  the  proposed  supplemental 
appropriation  includes  $9,145  for  obligations  incurred  for 
assistance  with  the  CASES  system  already  provided  to 
Glenn  County.  Therefore,  the  proposed  ordinance  should 
be  amended  to  provide  for  retroactive  authorization. 
According  to  Mr.  Zimmerly,  the  Department  of  Child 
Support  Services  has  not  yet  received  any  of  the  subject 
funds  from  the   State,   since  the   State  reimburses  the 


2  The  Budget  Analyst  notes  that  the  since  the  Department  of  Child  Support  Services  is  entirely 
funded  through  the  State,  the  State  should  fund  any  overtime  costs  the  Sheriffs  Department  may 
incur  in  order  to  station  two  Deputy  Sheriffs  at  the  Department  of  Child  Support  Services.  Should 
the  Sheriffs  Department  not  need  to  incur  additional  overtime  costs  of  $5,291,  the  funds  would 
remain  with  the  State  since  the  State  reimburses  the  Department  of  Child  Support  Services  as 
expenses  are  claimed  on  a  quarterly  basis. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  the  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 

Department  of  Child  Support  Services  as  expenses  are 
claimed  on  a  quarterly  basis.  Mr.  Zimmerly  advises  that 
the  department  has  not  incurred  any  obligations  for  any 
of  the  other  costs  under  this  $839,562  supplemental 
appropriation  request. 

Recommendations:  1.  Reduce  Salaries  and  Mandatory  Fringe  Benefits 
included  in  the  proposed  supplemental  appropriation  (File 
00-2184)  by  $40,039,  from  $85,416  to  $53,385,  to  reflect 
the  actual  number  of  months  the  proposed  two  new 
employees  will  be  employed  in  FY  2000-01,  in  accordance 
with  Comment  No.  1.  This  reduction  of  $40,039  includes 
$32,031  for  Permanent  Salaries  and  $8,008  for  Mandatory 
Fringe  Benefits. 

2.  Reduce  the  proposed  work  order  to  the  Sheriffs 
Department  (File  00-2184)  by  $18,686,  from  $144,945  to 
$126,259,  to  reflect  the  actual  number  of  months  the  work 
order  will  be  in  place,  in  accordance  with  Comment  No.  2 
above. 

3.  Amend  the  proposed  ordinance  (File  00-2184)  to  reduce 
the  funding  sources  for  the  subject  appropriation  by 
$58,725  to  correspond  with  the  total  $58,725  in  reductions 
recommended  above  ($40,039  budgeted  for  the  two  new 
investigator  positions  and  $18,686  budgeted  for  the  work 
order  to  the  Sheriffs  Department). 

4.  Amend  the  proposed  ordinance  (File  00-2184)  to  require 
the  Department  of  Child  Support  Services  to  eliminate 
the  two  existing  8204  Institutional  Police  Officer  positions 
as  each  position  becomes  vacant,  in  accordance  with 
Comment  No.  3  above. 

5.  Amend  the  proposed  ordinance  (File  00-2184)  to 
provide  for  retroactive  authorization  for  $9,145  in  services 
already  provided  to  Glenn  County  related  to  the  CASES 
system,  in  accordance  with  Comment  No.  4  above. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  the  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


6.  Approve  the  proposed  supplemental  appropriation  (File 
00-2184),  as  amended,  and  approve  the  proposed 
amendment  to  the  Annual  Salary  Ordinance  (File  00- 
2183). 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Department  of  Child  Support  Services 

Customer  Service  Unit 

Fiscal  Year  2000-2001  (8  mos  from  110100  thru  063001) 


n.i_i_d.cument    i 


PERSONNEL 

Position 

1  -  8160  Assistant  Chief  Family  Support  Investigator  (Step  5) 
3-8159  Family  Support  Investigator  III 
1  -  8158  Family  Support  Investigator  II  (Step  5} 
Subtotal  Salaries 

Mandatory  Fringe  Benefits 
Total  Personnel 


OPERATING  COSTS 

Travel 

Training 

Professional  Services 

Contracts 

Services 

Printing 

Advertising 

Fuel/Auto  Service 

Materials  and  Supplies 

Subscriptions 

Telephone  Usage 

Miscellaneous 

Total  Operating  Costs 


ONE  TIME  COSTS 

Complaint  Resolution  Tracking  Data  Base  Development  (Computer  Consulting) 
Voice  Recognition  Unit  (VRU)  Hardware 
Full  Size  Sedan 

Computer  Equipment  (5-PC's  and  1 -Printer) 
Total  One  Time  Costs 


48,354 
37,062 


00100 

85,416 

01300 

21,354 

106,770 

02300 

4,394 

02300 

16,500 

02700 

2,200 

02700 

5,000 

02700 

43,059 

03500 

2,750 

03500 

2,750 

04000 

4,400 

04000 

2,200 

03500 

200 

081 ET 

61.392 

03500 

3,701 

148,546 

02700 

35,000 

06000 

5,500 

06000 

21,000 

04000 

18,500 

80,000 

Total  State  Allocation  Spending  Plan 

*      Three  Ombudsperson  positions  budgeted  in  regular  Child  Support 
Services  budget  must  be  transferred  per  State  requirements. 


335.316 


Source:  Department  of  Child  Support  Services 


kk 


Attachment  II 


WILLIE  L.  BROWN,  JR.  /^5SSK^\  MILTON  \i.  u\  AMS 

MAYOR  feloffiSSSF  Isl  ACTING  DIRECTOR 

CITY  AND  COUNTY  OF 
SAN  FRANCISCO 


DEPARTMENT  OF  CHILD  SUPPORT  SERVICES 

617  Mission  Street,  San  Francisco,  CA  94105-3503    Tel.  (415)  356-2700 


January  10,  2001 


Harvey  Rose,  Budget  Analyst 

San  Francisco  Board  of  Supervisors 

CUSTOMER  SERVICE  UNIT  STAFFING 

The  customer  service  function  is  a  requirement  of  the  state's  Ombudsman  Program.  The 
Ombudsman  program  is  established  for  the  purpose  of  assisting  customers  in  resolving  issues 
related  to  their  child  support  cases  as  well  as  other  service-related  functions. 

The  Department  of  Child  Support  Services  Director  shall  appoint  staff,  qualified  by  training  and 
experience  to  perform  the  duties  of  the  office.  In  San  Francisco,  the  need  for  several 
Ombudsman  positions  was  identified  based  on  caseload  size.  Because  these  three  8159,  Family 
Support  Investigator  111  positions  were  previously  anticipated,  they  were  budgeted  for  in  the 
fiscal  year  2000-2001.  Upon  release  of  the  customer  service  initiative  guidelines,  the  state  made 
it  clear  that  this  unit  was  to  be  supervised  by  an  individual  that  would  report  to  the  Director.  This 
person  was  to  have  a  strong  background  and  broad  experience  in  the  child  support  program  as 
well  as  an  understanding  of  the  principles  of  customer  satisfaction  and  quality  control.  In 
addition,  to  be  effective  and  gain  the  trust  of  the  public,  the  customer  service  unit  was  designed 
to  be  autonomous  and  free  from  the  influence  of  day-to-day  operations.  Thus,  the  need  for  a  new 
81 60,  Assistant  Chief  Investigator  position  to  oversee  the  program  was  required  to  carry  out  the 
aforementioned,  as  well  as  provide  quality  control  activities  and  report  to  the  Director. 
The  Ombudsman  work  directly  with  the  public,  with  much  of  the  work  being  field  related.  The 
customer  service  unit,  however,  will  perform  many  other  service-related  duties  such  as 
maintenance  of  the  noncustodial  parent  (NCP  Program)  employment  and  training  services.  It  is 
critical  to  have  a  caseload  management  person  assigned  to  the  unit  to  give  exclusive  care  to  the 
customer  service  unit  child  support  cases.  Thus  the  request  for  a  new  8158,  Family  Support 
Investigator  II  caseworker  position. 


4S 


City  and  County  of  San  Francisco 


OFFICE  OF  THE  SHERIFF 


Attachment    III 


«A  Michael  Hennessey 

2\  SHERIFF 

415  -  554  -  7225 


January  10,  2001 
Ref:  BPM  2000-049 


TO:  Emilie  Neumann 

FROM:  Jean  Mariani 

SUBJECT:     Files  00-2184  and  00-2183 


Y 


You  requested  additional  information  regarding  two  Sheriff's  Deputies 
Included  In  the  Department  of  Child  Support  Services  supplemental 
appropriation  request. 

Once  this  funding  is  approved,  we  would  create  two  additional  deputy 
requisitions.  A  new  academy  class  begins  February  5.  Deputies 
enrolled  in  this  academy  will  be  available  for  service  in  six  months.  In 
the  interim,  the  department  will  assign  one  deputy  on  regular  salary 
and  one  deputy  on  overtime  to  work  at  the  Department  of  Child 
Support  Services.  The  additional  overtime  cost  for  the  remainder  of 
the  fiscal  year  would  be  $2,645.  These  deputies  are  under  the  Field 
and  Support  Services  Division,  which  has  more  flexibility  in 
assignments  than  the  other  major  service  areas  of  the  department, 
i.e.,  the  jails  and  courts. 

However,  in  the  worst  case  scenario,  should  the  department  need  to 
pay  overtime  to  both  assigned  deputies,  Jthe  incremental  overtime  cost 
for  the  four-month  period  (March  1  through  June  30,  2001)  would  be 
approximately  $5,291,  or  $1,323  per  month,  including  related 
mandatory  fringe  benefits. 

Based  on  a  March  1,  2001  start  date,  the  estimated  cost  of  the  work- 
order  is  $120,968. 


ROOM  4M.OTY  HALL 

1  DR.  CARLTON  B.  GOODLETT  PLACE 


SAN  FRANCISCO,  CA    94102 


FAX  415-  554  -7050 
TOTAL    P. 02 


LC 


Attachment   IV 


8304  Deputy 

Child  Support  Services 
Base  Salary  (Top  Step) 

8304-  Deputy 


Count       Amount    Percentage 


0        52,094 


Pay  Periods 


0.0 


3-1  through  e-30-2001 
8304  Deputy 


0        $2,146 


8.7 


Total  Base  Salaries 


Night  Differential  (1700-0700) 

Overtime 

Holiday  Pay  (11  days) 

POST  Pay 

Annual  Uniform  Allowance 

Total  Pay 

Retirement  (City  Share) 
Retirement  Pick-up 
Health  Service 
Health  Service  Pick-up 
Dental  Insurance 
2000  Benefit  Increase 
Medicare 

Unemployment  Insurance 
Total  Fringe  Benefits 

Subtotal  Compensation 


0.00 

hrs/week 

8.00% 

80.00 

hrs/week 

1 50.00% 

0 

$318.03 

6.00% 

0 

$750.00 

7.099% 
9.00% 

0 

S83.46 

0 

$103.86 

0 

$39.42 

10% 

$0.00 

1.45% 
0.170% 

55.337 


55,337 


802 

94 

896 

56.233 


Initial  Costs  (uniform/radio)  0  $3,500.00 

Total 

Overhead  @  10%  of  Salaries  (&raiehir  -tfrre.) 

TOTAL  REQUESTED 


bb.132  | 


3.735 
59.968 


Backfill  for  Academy 
Uniform/Radio 

Total  2000-01 


54,000 
7,000 

120,968 


Source:    Sheriff's   Department 


TOTftL  P. 02 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


Item  7  -  File  00-1251 

Department: 

Item: 


Amount: 
Source  of  Funds: 


Department  of  Public  Health  (DPH) 

Hearing  to  consider  the  release  of  $1,233,854  in  reserved 
funds  for  the  San  Francisco  General  Hospital  Department 
of  Psychiatry  Acute  Inpatient  Service. 

$1,233,854 

During  the  Board  of  Supervisors  FY  2000-01  budget 
hearings,  $1,233,854  of  the  funding  for  the  San  Francisco 
General  Hospital  (SFGH)  Department  of  Psychiatry  was 
reserved  in  two  amounts: 


Description: 


Budget: 


Comments: 


•  $833,854  for  permanent  salaries. 

•  $400,000  for  contractual  services. 

According  to  Ms.  Monique  Zmuda  of  DPH,  the  Board  of 
Supervisors  appropriated  $1,233,854  for  the  continuation 
of  24  acute  inpatient  psychiatric  beds  at  SFGH.  Ms. 
Zmuda  states  that  these  funds  were  reserved  in  order  to 
allow  the  Board  of  Supervisors  to  review  DPH's 
performance  in  (a)  reducing  the  length  of  inpatient  stays 
for  psychiatric  patients  who  are  no  longer  acute,  and  (b) 
achieving  its  revenue  goals. 

The  subject  release  of  reserves  would  fund  continuation  of 
SFGH's  acute  inpatient  psychiatric  services  at  then- 
current  level  by  funding: 

•  Portions    of    ongoing    civil    service    staff    members' 
salaries  ($833,854). 

•  The  ongoing  University  of  California,  San  Francisco 
contract  for  psychiatric  physician  services  ($400,000). 

1.  According  to  Ms.  Zmuda,  as  part  of  its  FY  2000-01 
budget  development,  DPH  proposed  to  eliminate  24  of  the 
92  acute  inpatient  psychiatric  beds  at  SFGH.  As  this 
proposal  was  not  accepted  by  either  the  Board  of 
Supervisors  or  the  Mayor,  DPH  formulated  the  following 
alternative  strategy  to  fund  the  24  beds. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 
48 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


SFGH  psychiatric  physicians  asserted  they  could  generate 
$1,800,000  in  Medi-Cal,  Medicare,  and  private  health 
insurance  revenue  per  year  from  the  24  SFGH  beds.  This 
assumed  that  the  psychiatric  patients  occupying  those 
beds  were  sufficiently  acute  to  be  eligible  for  Medi-Cal, 
Medicare,  and  private  health  insurance  coverage. 
However,  because  the  total  cost  of  operating  those  beds 
was  estimated  to  be  $3,000,000,  DPH  agreed  to  provide 
the  balance  of  $1,200,000  using  (a)  $800,000  of  mental 
health  contract  funding  previously  used  to  place  acute 
psychiatric  patients  with  Medicare  in  other  hospitals,  and 
(b)  $400,000  of  General  Fund  support.  Under  the  DPH 
proposal,  if  the  SFGH  psychiatric  physicians  failed  to 
meet  their  revenue  target  because  they  were  unable  to 
reduce  the  length  of  psychiatric  inpatient  stays 
(particularly  if  they  failed  to  reduce  the  number  of 
decertified  days  for  non-acute,  non-revenue  generating 
stays),  then  DPH  would  have  the  option  to  close  some  or 
all  of  the  24  beds. 

DPH  has  supported  this  SFGH  acute  inpatient 
psychiatric  services  initiative  by  investing  more  resources 
into  alternate  levels  of  psychiatric  care,  in  particular  by 
creating  more  placement  opportunities  which  are 
appropriate  for  patients  diverted  or  discharged  from  acute 
care.  Attachment  I,  provided  by  Ms.  Zmuda,  shows  the 
325  new  beds  which  are  being  funded  by  DPH  in  FY  2000- 
01  at  a  total  cost  of  $4,839,775  for  the  placement  of  non- 
acute  psychiatric  patients. 

2.  Ms.  Zmuda  states  that,  based  on  the  plan  to  continue 
the  24  SFGH  beds  described  in  Comment  No.  1  above, 
SFGH  has  maintained  a  full  census  of  92  acute  inpatient 
psychiatric  services  thus  far  during  FY  2000-01  As  of 
October  of  2000,  the  SFGH  Department  of  Psychiatry  has 
exceeded  its  performance  objectives  and  financial  goals. 
Attachment  II,  provided  by  DPH,  shows  that  in  October  of 
2000  the  Department  of  Psychiatry  had  (a)  reduced  its 
year-to-date  average  length  of  stay  (ALOS)  to 
approximately  8.7  percent  less  than  the  goal,  and  (b)  (a) 
exceeded  its  year-to-date  revenue  goal  by  approximately  3 
percent. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

49 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 

3.  Since  the  SFGH  Department  of  Psychiatry  has 
exceeded  its  performance  objectives  and  financial  goals, 
the  Budget  Analyst  recommends  release  of  the  $1,233,854 
in  reserved  funds  for  SFGH's  acute  inpatient  psychiatric 
services. 

Recommendation:  Approve  the  proposed  release  of  reserves. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

50 


Attachment  I 


New  Program  in  FY  00-01 

Number  of 

New 
Beds/Slots 

Amount 

Increase  in  number  of  Organic  Disorder  Patched  Skilled  Nursing  Beds 

4 

188,342 

New  LHH  Med/  Psych  SNF  ward  (funded  through  existing  resources) 

30 

Increase  to  Napa  Intensive  Skilled  Nursing  Psych  Beds 

4 

456,000 

Increased  days  at  high  level  skilled  nursing  at  Crestwood 

1 

40,000 

New  Supportive  Housing  Program  -Le  Naine 

98 

1,048,000 

Respite  hotel  program  for  psych  inpatient  and  PES  referrals 

50 

900,000 

Respite  beds  at  Windsor  Supportive  Hotel  program 

16 

120.000 

New  Residential  Care  Beds 

20 

324.766 

New  Shelter  Support  Mental  Health  Program 

35 

220,000 

New  residential  diversion  mental  health  program 

12 

1.052.000 

New  Homeless  supportive  housing  through  AB2034  Program 

55 

490.667 

325 

4,839,775 

Source:  Department  of  Public  Health 


51 


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52 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


Item  8  -  File  00-2187 

Department: 

Item: 


Contract  Term: 


Description: 


Department  of  Public  Health  (DPH) 

Resolution  authorizing  the  Director  of  Public  Health  and 
the  Purchaser  to  execute  a  contract  between  the  City  and 
County  of  San  Francisco  and  Health  Advocates,  LLP  to 
provide  uncompensated  care  recovery  services. 

March  1,  2001  through  December  31,  2002  (approximately 
22  months). 

Uncompensated  care  recovery  services  include  the 
assistance  to  complete  Supplemental  Security  Income 
(SSI)  and  Medi-Cal  eligibility  applications  on  behalf  of  - 
DPH  patients,  and  representation  and  legal  assistance  for 
patients  in  SSI  fair  hearings  and  appeals,  for  the  purpose 
of  collecting  unpaid  inpatient  hospital  bills  for  DPH 
services  that  are  provided  to  indigent  patients.  The 
proposed  resolution  would  authorize  DPH  to  enter  into  a 
contract  with  Health  Advocates,  LLP  (HA),  a  private 
contractor,  to  provide  an  uncompensated  care  recovery 
program. 

The  DPH  issued  a  Request  for  Proposals  (RFP)  in 
September  of  2000,  and  received  the  following  two  bids  in 
response  to  its  RFP:  (1)  Health  Advocates,  LLP  for 
$1,180,000  each  contract  year  and,  (2)  Paralign  for 
$1,090,000  each  contract  year.  Attachment  I,  provided  by 
Ms.  Monique  Zmuda  from  the  DPH,  indicates  that  the  bid 
amounts  were  based  on  estimated  annual  revenue  of 
$6,000,000,  which  has  since  been  reduced  to  $5,800,000. 
Ms.  Zmuda  further  advises  in  Attachment  I  that  HA 
reduced  its  bid  by  $90,000  to  $1,090,000  each  contract 
year,  the  same  amount  bid  by  Paralign,  after  negotiations 
with  the  DPH.  According  to  Ms.  Zmuda,  HA  was  selected 
based  on  the  DPH's  evaluation  of  the  established  criteria, 
which  awards  points  based  on  recent  relevant  experience, 
the  scope  of  work  to  be  performed,  the  quality  of  past 
projects  and  cost.  Ms.  Zmuda  states  that  the  DPH  also 
required  the  bidder  to  provide  these  services  by  multi- 
lingual and  multi-cultural  staff.  Ms.  Zmuda  further 
states  that  the  DPH  also  built  in  additional  services  into 
the  scope  of  work,  including  following  up  on  treatment 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

53 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


authorization  requests,  and  incurring  the  cost  of  re-billing 
for  services  provided,  once  the  clients  have  been  made 
eligible  for  Medi-Cal. 

According  to  Ms.  Zmuda,  the  DPH  has  contracted  out 
uncompensated  care  recovery  services  since  1988  to  help 
supplement  in-house  efforts  on  uncompensated  care 
recovery  services.  Ms.  Zmuda  advises  that  San  Francisco 
General  Hospital  (SFGH)  has  an  internal  staff  of  ten 
Hospital  Eligibility  Workers  to  assist  SFGH  patients  in 
identifying  financial  resources  to  pay  for  inpatient 
hospitalization  for  which  no  source  of  funding  is  currently 
available.  Eligibility  determination,  which  is  provided  by 
DPH  personnel,  and  authorized  by  the  City's  Department 
of  Human  Services,  typically  includes  assistance  in  ■ 
applying  for  Medi-Cal  or  SSI,  and  making  appropriate 
third-party  claims.  The  contractor  will  handle  those  cases 
which  the  internal  DPH  eligibility  workers  have  deemed 
"unreimburseable,"  usually  involving  former  inpatients 
who  have  been  discharged  form  SFGH.  These 
uncompensated  care  services  include  identifying  financial 
resources  to  pay  for  the  care  provided,  field  work  on 
behalf  of  indigent  patients,  such  as  visits  to  homeless 
shelters;  assistance  in  obtaining  further  medical 
treatments  or  evaluations,  as  necessary;  efforts  to  locate 
former  inpatients  whose  addresses  are  not  known,  and 
patient  advocacy  and  representation  in  appealing  denials 
of  benefits  to  administrative  agencies. 

Based  on  a  prior  year  actual  recovery  from  contracting 
this  service,  Ms.  Zmuda  advises  that  the  DPH  was  paid 
approximately  $5,800,000  a  year,  or  approximately 
$483,333  a  month  from  making  indigent  patients  eligible 
for  third-party  payment.  The  DPH  anticipates  the  same 
level  of  annual  reimbursement  to  be  made  under  the 
proposed  contract  period. 

The  proposed  subject  contract  would  only  pay  the 
contractor  a  percentage  of  the  revenues  actually  collected, 
on  behalf  of  the  City,  according  to  the  following  schedule: 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

54 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


Cumulative  Revenues  Generated 
Each  Contract  Year 


Comments: 


$2  million 
$3  million 


to$l,999.999  NET 
to$2,999,999  NET 
and  above      NET 


Contingency  Fees 
Paid  to  the  Contractor 

20  percent 
18  percent 
16  percent 


Recommendation: 


"NET'  is  used  to  describe  the  actual  cash  received  by 
SFGH  as  opposed  to  any  unique  program  determinations 
of  allowable  amounts  and  the  deduction  of  contractual 
allowances.  In  accordance  with  the  contract  provisions, 
HA  would  be  paid  a  varying  fee  by  the  DPH  based  on  the 
percentage  of  the  revenues  collected  by  the  contractor. 

1.  As  indicated  above,  the  proposed  contract  would 
extend  for  the  22-month  period  from  March  1,  2001 
through  December  31,  2002.  According  to  Ms.  Zmuda, 
DPH  expects  to  realize  approximately  $10,633,333  in 
additional  revenues  under  this  22-month  contract,  with 
the  contractor  to  be  paid  an  estimated  $1,884,667,  or  an 
overall  average  of  17.72  percent  of  the  revenue  collected, 
for  net  estimated  revenues  to  the  City  of  $8,748,667  for 
the  term  of  the  22-month  contract.  Attachment  II, 
provided  by  DPH,  highlights  the  estimated  revenue  and 
contingency  fees  associated  with  the  subject  contract 
agreement.  As  mentioned  above,  the  actual  contingency 
fees  paid  to  HA  will  depend  on  the  revenue  realized 
during  the  contract  period. 

2.  The  proposed  subject  resolution  authorizes  the 
Director  of  Public  Health  and  the  Purchaser  to  make 
amendments  to  the  subject  contract,  if  needed.  According 
to  Ms.  Zmuda,  this  is  a  standard  provision  in  all  of  the 
DPH's  contracts,  which  allows  the  DPH  to  make  minor 
changes,  such  as  including  an  additional  scope  of  work 
requirement  or  extending  a  contract  for  a  few  months 
while  an  RFP  is  in  process,  but  not  change  the  intent  of 
the  original  contract. 

Approve  the  proposed  resolution. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

55 


DEC-20-2000   14  = 18   FROM  DPH-CFQ 


City  and  County  of  San  Francisco 


Date: 
Memo  To: 

From: 


December  20,  2000 

Harvey  Rose 
Budget  Analyst 

Monique  Zmuda  /">T, 
Chief  Financial  Officer 


to    harueyrose        Attachment    I 

Department  of  Public  Health 


Mitchell  H.  Katz,  M.D. 
Director  of  Health 


Re: 


Proposed  Contract  with  Health  Advocates,  LLP 


This  memo  is  in  response  to  questions  regarding  the  proposed  contract  with  Health 
Advocates  LLP,  to  provide  uncompensated  care  recovery  reimbursement  services  for  the 
Community  Health  Network  of  the  Department  of  Public  Health. 

The  following  summarizes  the  RFP  Process: 


Date  RFP  Issued: 
Selection  Made: 


September  29,  2000 
November  21,  2000 


Number  of  Bidders:     2-  Both  profit-making  private  firms 

Bid  Amounts:  Both  firms  were  requested  to  bid  on  services  for  revenue  recovery  of  $6 
million  annually.  Although  the  bid  from  Health  Advocates  was  $90,000  higher  than  the 
other  qualified  bidder,  Health  Advocates  had  a  higher  score,  and  thus  was  awarded  the 
contract.  In  contract  negotiations  with  Health  Advocates,  the  Department  was  successful 
in  securing  a  reduction  equivalent  to  $90,000  in  the  contract  rate  for  the  services. 


(415)  554-2600 


101  Grove  Street 


Fil»n«m«  and  P»m 

San  Francisco,  CA  94102 


56 


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57 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 

Item  9  -  File  00-2185 


Department: 


Item: 


Department  of  Public  Healtb  (DPH) 
Real  Estate  Division  (RED) 

Resolution  autborizing  a  new  lease  of  11,125  square  feet 
at  30  Van  Ness  Avenue  for  tbe  Department  of  Public 
Healtb. 


Location: 
Purpose  of  Lease: 


30  Van  Ness  Avenue,  second  floor 

To  provide  space  for  the  DPH's  Health  Promotion  and 
Prevention  unit  (women's  health  services,  traffic  and 
injury  prevention,  tobacco  cessation,  and  HIV  prevention) 
which  is  currently  located  at  101  Grove  Street  and  1540 
Market  Street. 


Lessor: 
Lessee: 


Herbst  Foundation 

The  City  and  County  of  San  Francisco,  for  use  by  the 
DPH. 


No.  of  Sq.  Ft.  and 
Cost  Per  Month: 


Annual  Cost: 


11,125  square  feet  at  a  monthly  rental  rate  of  $35,229.17 
(approximately  $3.17  per  square  foot  per  month).  On  an 
annual  basis,  rent  would  total  $422,750  (approximately 
$38  per  square  foot  per  year). 

$422,750 


Utilities  and 
Janitorial  Service: 

Term  of  Lease: 


Right  of  Renewal: 


Provided  by  Lessor. 

May  1,  2001  to  February  28,  2006  (four  years  and  ten 

months) 

Two  options  of  five  years  each  to  extend  the  term  of  the 
lease.  The  first  option  to  extend  would  adjust  the  rent  for 
cost  of  living.  The  second  option  to  extend  would  increase 
the  rent  to  95  percent  of  the  then  fair  market  value  for 
space  of  comparable  size,  age,  quality,  and  location  within 
the  Civic  Center  area  of  the  City. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

53 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


Source  of  Funds: 


$70,458.34  within  the  existing  Fiscal  Year  2000-2001 
DPH  budget  (two  months,  May  to  June  of  2000,  at 
$35,229.17  rent  per  month).  The  amount  of  $70,458.34 
comprises  (a)  $12,682.50  in  State  grant  funds,  and  (b) 
$57,775.84  in  General  Fund  monies.  As  shown  in 
Attachment  I  provided  by  the  DPH,  the  annual  cost  of 
approximately  $422,750  for  the  proposed  lease  of  11,125 
square  feet  of  space  at  30  Van  Ness  Avenue  would  be 
covered  in  the  following  manner:  (a)  $89,946  in  State 
grant  funds,  and  (b)  $332,804  in  General  Fund  monies.  As 
noted  in  Attachment  II  provided  by  the  DPH,  funds  for 
the  proposed  lease  have  been  included  in  the 
Department's  Fiscal  Year  2001-2002  budget  request.  Mr. 
Charles  Dunn  of  the  Real  Estate  Division  states  that  the 
proposed  lease  contains  the  standard  clause  (Section- 
23.22)  which  permits  the  City  to  terminate  the  lease  in 
the  event  of  non-appropriation  of  the  necessary  operating 
funds. 


Description: 


The  proposed  resolution  would  authorize  a  new  five  year 
lease  of  11,125  square  feet  of  space  at  30  Van  Ness 
Avenue  from  the  Herbst  Foundation.  This  space  would 
accommodate  the  DPH's  Health  Promotion  and 
Prevention  unit. 


Comments: 


1.  The  60  employees  that  staff  the  DPH's  Health 
Promotion  and  Prevention  unit  are  currently  located  in 
4,293  square  feet  at  101  Grove  Street,  a  City-owned 
building,  and  3,417  square  feet  at  1540  Market  Street,  a 
leased  facility,  for  a  total  of  7,710  square  feet.  This  lease 
at  1540  Market  Street  is  on  a  month-to-month  basis  and 
will  be  terminated  on  May  1,  2001.  Under  the  proposed 
lease,  these  60  employees  would  move  to  30  Van  Ness 
Avenue  to  occupy  11,125  square  feet  of  space.  The  new 
location  at  30  Van  Ness  Avenue  would  provide  DPH  with 
approximately  185.4  square  feet  per  employee,  which  is 
56.9  square  feet  per  employee  more  than  the  current 
average  space  of  128.5  square  feet  per  employee. 
According  to  Mr.  Dunn,  the  average  amount  of  space  per 
City  employee  ranges  from  175  to  225  square  feet. 
Attachment  II,  provided  by  the  DPH,  explains  why  the 
DPH  needs  3,415,  or  44.3  percent  more  square  feet  to 
alleviate  overcrowded  conditions.  Mr.  Dunn  further  points 
out  that  this  proposed  lease  provides  for  a  consolidation  in 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

59 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


one  location  of  tbe  DPH  Healtb  Promotion  and  Prevention 
Unit. 

3.  The  Lessor,  the  Herbst  Foundation,  would  construct, 
at  a  maximum  cost  of  $110,000  to  the  City,  tenant 
improvements  pursuant  to  the  DPH's  specifications,  as 
shown  in  Attachment  III  provided  by  the  DPH.  According 
to  Ms.  Judith  Schutzman  of  the  DPH,  the  Department 
anticipates  these  improvements  will  be  completed  by  May 
1,  2000,  which  is  the  date  that  DPH  employees  would 
move  into  the  new  office  space  at  30  Van  Ness  Avenue. 
Ms.  Schutzman  states  that-  DPH's  share  of  these  tenant 
improvement  costs,  estimated  not  to  exceed  $110,000, 
have  already  been  budgeted  in  DPH's  Fiscal  Year  2000- 
2001  Operating  Budget,  as  approved  by  the  Board  of- 
Supervisors.  The  landlord  would  pay  between  $400,000 
and  $500,000  for  these  tenant  improvements,  for  total 
estimated  tenant  improvement  costs  of  $510,000  to 
$610,000.  The  Department  would  also  pay  for  moving 
expenses  at  an  estimated  cost  of  $15,000,  and  telephone 
wiring  and  installation  at  an  estimated  cost  of  $100,000. 
Such  expenses  would  be  paid  from  DPH's  Fiscal  Year 
2000-2001  Operating  Budget,  according  to  Ms. 
Schutzman. 

4.  As  previously  noted,  under  the  present  circumstances 
there  is  no  additional  rental  cost  to  the  City  for  the  101 
Grove  Street  space  which  is  City-owned.  The  proposed 
lease  provides  for  a  monthly  rent  of  $35,229.17  for  its  five 
year  term  commencing  May  1,  2001.  This  proposed  rent 
of  $35,229.17  is  $31,538.81,  or  approximately  855  percent 
more  than  the  current  monthly  rent  charged  to  DPH  for 
the  Department's  lease  at  1540  Market  Street,  which  is 
$3,690.36,  or  $1.08  per  square  foot  per  month.  However, 
as  stated  in  the  attached  memorandum  from  Mr.  Dunn 
(Attachment  IV),  the  monthly  rent  charged  to  DPH  for  the 
Department's  month-to-month  lease  at  1540  Market 
Street  will  increase  on  May  1,  2001,  to  between  $9,397 
and  $10,251,  or  $2.75  to  $3.00  per  square  foot  per  month. 
In  future  years,  the  proposed  rent  of  $35,229.17  at  30  Van 
Ness  Avenue  for  11,125  square  feet  would  be  between 
$24,978.17  and  $25,832.17  more  than  the  adjusted 
monthly  rent  that  would  be  charged  to  DPH  for  the 
Department's  existing  lease  at  1540  Market  Street  for 
3,417    square    feet,    if  DPH    were    to    remain    at    such 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

60 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 

premises,  according  to  Mr.  Dunn.  However,  DPH  will  be 
occupying  3,415  square  feet  of  additional  leased  space 
(11,125  less  7,710  total  square  feet  for  the  two  offices  at 
101  Grove  Street  and  1540  Market  Street.)  Since  the 
Department  is  vacating  4,293  square  feet  of  City-owned 
space  at  101  Grove  Street,  this  will  create  4,293  square 
feet  of  available  space. 

5.  Mr.  Dunn  reports  that  the  proposed  monthly  rental 
rate  of  $35,229.17  represents  fair  market  value. 

Recommendation:  Approve  the  proposed  resolution. 


BOARD  OF  SUPERVISORS 

BUDGET  ANALYST 

61 


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City  and  County  of  San  Francisco 
Department  of  Public  Health 
Population  Health  &  Prevention 

COMMUNITY  MENTAL  HEALTH  SERVICES 


Attachment    II 
Page    1    of    2 
Judith  Schutzman,  MPA 
Operations  Manager 

1380  Howard  Street,  5th  Floor 

San  Francisco,  CA  94103-2614 

(415)255-3405  FAX  (415)252-3015 

Judy_Schutzman@dph.sf.ca. us 


MEMORANDUM 


Date:  January  3,  2001 

To:  Anna  Weinstein 

Board  of  Supervisors'  Budget  Analyst 

From:  Judy  Schutzman 

Subject:        File  #00-2185 

30  Van  Ness  Lease 

The  Department  of  Public  Health  proposes  to  relocate  60  employees  of  the  Health 
Promotion  and  Prevention  unit  from  101  Grove  Street  and  1540  Market  Street.  At 
present,  these  units  are  housed  in  approximately  7,710  square  feet  of  space;  4,293 
square  feet  at  101  Grove  and  3,417  square  feet  at  1540  Market.  Of  the  60  Health 
Promotion  staff,  48  are  located  at  101  Grove  Street.  The  space  at  1540  Market  Street 
would  be  abandoned  once  this  move  is  accomplished. 

In  recent  years,  the  Health  Promotion  unit  has  expanded  significantly  due  to  new 
programs  promoting  pedestrian  and  traffic  safety,  breast  cancer  awareness,  tobacco 
cessation,  HIV  prevention  and  other  public  health  concerns.  As  staff  was  added,  they 
were  housed  wherever  space  could  be  found  in  101  Grove.  Several  employees  are 
doubled  up  in  office  space  designed  for  one  person.  The  48  staff  at  101  Grove  have 
less  than  90  square  feet  per  person.  In  addition,  because  this  unit  provides  health 
education  services  to  the  public,  there  is  a  significant  need  for  public  information  and 
other  training  materials  as  well  as  meeting  space  for  presentation  of  programs. 

DPH  management  is  working  with  the  Bureau  of  Architecture  to  prepare  a  plan  to 
rearrange  the  space  at  101  Grove  Street  once  this  staff  moves  out.  Some  of  the 
changes  contemplated  include  relocation  of  the  Immunization  Clinic  from  the  4m  floor  to 
the  1st,  moving  the  Epidemiology  unit  from  25  Van  Ness  to  relieve  overcrowding  there, 
and  providing  Birth  and  Death  records  with  more  space. 


63 


Attachment  II 
Fage  2   of  2 


File  00-2185  30  Van  Ness,  page  2 


The  Department  proposes  to  pay  for  this  space  with  partial  funding  from  State  revenue 
to  the  Tobacco  Free  and  Wedge  projects,  approximately  21%  of  the  total,  and  the 
balance  with  general  fund  monies.  Funds  for  this  lease  have  been  included  in  the 
Department's  fiscal  year  2001-2002  budget  request. 

Should  you  have  additional  questions,  please  call  me  at  255-3405. 


Cc:       Monique  Zmuda 
Barbara  Garcia 
Charles  Dunn,  Real  Estate 


64 


City  and  County  of  San  Francisco 
Department  of  Public  Health 
Population  Health  &  Prevention 

COMMUNITY  MENTAL  HEALTH  SERVICES 


Attachment    III 
Judith  Schutzman,  MPA 

Operations  Manager 

1380  Howard  Street,  5th  Floor 

San  Francisco,  CA  94103-2614 

(415)255-3405  FAX  (415)252-3015 

Judy_Schutzman@dph.sf.ca.us 


MEMORANDUM 


Date:  December  29,  2000 

To:  Anna  Weinstein 

Board  of  Supervisors'  Budget  Analyst 

From:  Judy  Schutzman 

Subject:         File  #00-2185 

30  Van  Ness  Avenue  Turn-key  Build-out 


The  Department  of  Public  Health  staff  has  worked  with  the  lessor's  architect  to  design 
space  suitable  for  the  needs  of  the  Health  Promotion  and  Prevention  staff.  The  lessor 
will  construct  these  improvements  and  turn  the  space  over  to  us  upon  substantial 
completion.  The  improvements  include  construction  of  offices  and  low-height  fixed 
partitions,  paint,  carpeting,  doors  and  door  hardware,  lighting,  air  conditioning,  standard 
electrical  wiring,  ceilings,  code  required  life  safety  items,  ADA  compliance,  permits  and 
fees,  etc.  As  part  of  the  economic  deal,  DPH  will  contribute  $1 1 0,000  toward  these 
costs. 

Cc:       Monique  Zmuda 
Barbara  Garcia 
Charles  Dunn,  Real  Estate  Department 


65 


Date:       1/4/01 
Sender:  Charlie  Dunn 
To:  Anna  Weinstein 

cc:  Judy  Schutzman 

Priority:  Normal 

Receipt  requested 
Subject:  DPH  /  30  Van  Ness 


Anna, 

As  we  discussed,  DPH  occupies  space  at  1540  Market  St.  (approx  3417  sq  ft).  These  leases  are  on 
"month  to  month"  at  old  rental  rates  ($1 .08  psf  /mo).  DPH  wants  to  consolidate  these  functions  with  others 
from  1 01  Grove  to  better  serve  the  public  (both  for  these  services  and  other  services  such  as  providing 
immunizations  at  101  Grove).  Thus,  Real  Estate  has  not  solicited  a  renewal  proposal  from  the  owners  of 
1 540  Market  St.  This  notwithstanding,  it  is  highly  likely  that  the  owner  will  raise  the  rent  for  these  spaces 
to  fair  market  value  which  I  estimate  to  be  in  the  mid  $30'  s  psf  per  year  (say  approximately  $2.75  -  $3.00 
psf  per  mo.)  There  are  a  number  of  factors  which  would  go  into  this  rate  -  not  the  least  of  which  would  be. 
tenant  improvements  and  length  of  lease  -  which  make  predicting  an  exact  rate  difficult. 


66 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


Item  10  -  File  00-2145 

Department: 

Item: 


Lessor: 


Lessee: 


Locations  Being 
Leased: 


Airport 

Resolution  approving  a  new  Advertising  Program  Lease 
between  Transportation  Media,  Inc.  and  the  City  and 
County  of  San  Francisco,  acting  by  and  through  its 
Airport  Commission. 

City  and  County  of  San  Francisco,  acting  by  and  through 
its  Airport  Commission 

Transportation  Media,  Inc.,  a  division  of  Eller  Media 
Company,  Inc.,  an  Illinois-based  company. 


According  to  Mr.  Bob  Rhoades  of  the  Airport,  there  are 
144  locations  for  the  proposed  advertising,  divided  into 
two  categories: 

•  Wall-mounted  advertising  spaces  in  the  Airport's 
parking  structures,  transit  stations,  shuttle  bus 
interiors,  non-terminal  bus  shelters,  the  rental  car 
center,  and  parking  area  connector  tunnels. 

•  Silent  monitors  in  the  International  Terminal's 
boarding  areas.  Silent  monitors  are  27  inch  high-tech 
screens. 

None  of  the  proposed  144  advertising  locations  would  be 
in  the  Airport's  North  Terminal,  South  Terminal,  or 
former  International  Terminal. 


Revenue  Generated: 


Under  this  proposed  lease,  Transportation  Media,  Inc.  is 
required  to  pay  the  Airport  a  first  year  Minimum  Annual 
Guarantee  of  $4,050,000  or  70  percent  of  gross  revenues, 
whichever  is  greater.  The  proposed  lease  states  that  the 
Minimum  Annual  Guarantee  shall  be  increased  annually 
by  the  amount  of  the  Consumer  Price  Index's  annual 
increase  (adjusted  for  any  decrease  in  the  annual  number 
of  enplanements).  If  further  advertising  sites  are  added 
to  the  lease,  then  the  Minimum  Annual  Guarantee  would 
be  increased  on  a  pro  rata  basis,  as  determined  by  the 
Airport. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

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Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


Term  of  Lease: 


Right  of  Renewal: 


Description: 


Five  years  from  the  earlier  of  (a)  the  date  on  which  any 
advertising  is  installed,  or  (b)  February  1,  2001. 

Three  one-year  options  exercisable  at  the  Airport 
Commission's  sole  option.  Mr.  Rhoades  states  that  there 
is  no  right  of  renewal  beyond  the  maximum  term  of  eight 
years  and  that  any  future  lease  would  be  subject  to  a 
Request  for  Proposal  (RFP). 

According  to  Mr.  Rhoades,  the  Advertising  Program  Lease 
represents  a  new  source  of  revenue  for  the  Airport.  Mr. 
Rhoades  advises  that  the  Airport  Commission  has  had  a 
policy  banning  advertising  inside  the  Airport's  terminals 
since  the  1980s.  This  policy  was  amended  in  early  2000 
when  the  Airport  Commission  decided  to  permit  (a) 
advertising  panels  in  certain  limited  areas  within  the 
Airport's  parking  structures,  transit  stations,  shuttle  bus 
interiors,  non-terminal  bus  shelters,  the  rental  car  center, 
and  parking  area  connector  tunnels,  and  (b)  silent 
monitors  in  the  International  Terminal's  boarding  areas. 
The  advertisements  displayed  would  be  subject  to 
approval  by  the  Airport's  Design  and  Review  Committee1. 
The  proposed  lease  prohibits  advertisements  which 
violate  the  Airport  Advertising  Standards  Policy, 
including  those  which  (a)  advertise  alcohol  or  tobacco 
products,  (b)  espouse  political  or  religious  views,  (c) 
promote  any  illegal  activity,  gambling,  or  services  in 
direct  competition  with  the  Airport's  business  objectives, 
or  (d)  contain  offensive  imagery  or  language. 
Transportation  Media,  Inc.  would  coordinate  all  of  the 
advertisers. 


Comments: 


1.  The  RFP  for  the  proposed  lease  was  issued  by  the 
Airport  in  July  of  2000  and  firms  were  required  to  submit 
proposals  with  a  Minimum  Annual  Guarantee  of 
$2,000,000  or  more.  According  to  Mr.  Patrick  Quinn  of 
the  Airport,  the  Airport  notified  approximately  25  firms  of 
an  informational  conference  which  was  held  on  June  28, 
2000.  Seven  of  the  firms  which  attended  were 
subsequently  sent  a  copy  of  the  Airport's  RFP.  The  seven 
firms  which  received  the  RFP  were  Airport  Consulting 


1  The  Airport's  Design  and  Review  Committee  consists  of  Mr.  Michael  Allen  (Project  Manager, 
Bureau  of  Design  and  Construction),  Mr.  Amur  Koleini  (Principal  Architect,  Facilities,  Operations 
and  Maintenance),  and  Mr.  Robin  Chiang  (Architect). 

BOARD  OF  SUPERVISORS 
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68 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


Incorporated,  Blazers  Airport  Advertising,  Cartelera 
Communications,  Eller  Media  (Transportation  Media, 
Inc.),  Foster  Media,  JC  Decaux  (Sky  Sites  Airport 
Advertising),  and  Lee  Fisher  Associates.  The  Airport's 
RFP  was  issued  at  the  same  time  as  the  airlines 
themselves  issued  a  similar  RFP  for  a  separate 
advertising  program  in  the  jet  bridges  (the  moveable 
corridors  which  connect  the  terminals  to  the  airplanes). 
Mr.  Rhoades  states  that  on  October  23,  2000  the  airlines 
chose  Transportation  Media,  Inc.  out  of  the  three 
proposals  which  were  submitted  to  the  airlines  (see 
Comment  No.  2).  In  response  to  the  Airport's  RFP,  on 
October  27,  2000  the  Airport  received  only  one  proposal 
from  Transportation  Media,  Inc.  which  had  already  been 
awarded  the  airlines'  jet  bridge  advertising  program - 
contract.  Attachment  I,  provided  by  the  Airport,  explains 
why  the  Airport  only  received  one  bid  in  response  to  its 
RFP.  The  responsiveness  of  Transportation  Media,  Inc.'s 
proposal  to  the  Airport  RFP's  minimum  standards  was 
evaluated  by  a  five-member  evaluation  team  comprising 
two  outside  consultants  who  are  experts  in  design  and 
advertising,  one  senior  airline  representative  involved  in 
advertising  and  promotions,  an  Airport  official 
responsible  for  exhibitions,  and  an  Airport  Finance 
official.  The  Transportation  Media,  Inc.  proposal  included 
a  Minimum  Annual  Guarantee  to  the  Airport  of 
$4,050,000  in  the  first  year  of  the  proposed  lease,  which  is 
$2,050,000  or  102.5  percent  more  than  the  Minimum 
Annual  Guarantee  of  $2,000,000  required  under  the 
Airport's  RFP. 

2.  According  to  Mr.  Rhoades,  the  idea  of  a  jet  bridge 
advertising  program  was  initiated  by  the  airlines  which 
own  60  domestic  terminal  jet  bridges.  The  Airport 
Commission  approved  the  concept,  and  extended  the 
program  to  include  the  17  jet  bridges  the  Airport  owns  in 
the  new  International  Terminal  which  are  operated  by 
the  airline  consortium,  the  San  Francisco  Terminal 
Equipment  Company,  LLC  (SFOTEC).  This  represents  a 
total  of  77  jet  bridges.  According  to  a  policy  statement 
approved  by  the  Airport  Commission,  the  airlines'  jet 
bridge  advertising  program  revenues  are  being  split  35 
percent  for  the  airlines,  35  percent  for  the  Airport,  and  30 
percent  for  Transportation  Media,  Inc.    This  means  that 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

69 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


tbe  airlines  and  tbe  Airport  jointly  receive  70  percent  of 
the  gross  revenues  and  Transportation  Media,  Inc. 
receives  30  percent,  which  is  comparable  to  the  70/30 
percent  split  between  the  Airport  and  Transportation 
Media,  Inc.  under  the  proposed  lease.  Mr.  Rhoades  states 
that,  once  the  Airport  Commission  authorized  the  jet 
bridge  advertising  program,  the  airlines  ran  their  own 
competitive  bid  process  without  any  involvement  from  the 
Airport.  The  airlines  received  proposals  from  three  firms: 
(a)  Transportation  Media,  Inc.,  (b)  Sky  Sites  Airport 
Advertising,  an  affiliate  of  JC  Decaux,  and  (c) 
Inplaneview,  Inc.  The  airlines  chose  Transportation 
Media,  Inc.  According  to  Mr.  Quinn,  the  proposal 
submitted  by  Transportation  Media,  Inc.  included  a 
Minimum  Annual  Guarantee  of  $2,887,500  to  the  Airport2  ■ 
or  35  percent  of  gross  receipts,  whichever  is  greater.  Mr. 
Rhoades  states  that  the  Airport  has  already  received 
revenues  from  the  jet  bridge  advertising  program. 
Attachment  II,  provided  by  the  Airport,  outlines  the 
history  and  financial  arrangements  of  the  jet  bridge 
advertising  program. 

3.  According  to  Mr.  Rhoades,  Transportation  Media,  Inc. 
is  already  booking  advertisers  to  use  the  advertising 
space  which  will  be  available  under  the  proposed  lease. 
Since  the  gross  advertising  revenues  are  to  be  split  70 
percent  for  the  Airport  and  30  percent  for  Transportation 
Media,  Inc.,  Mr.  Rhoades  notes  that,  given  the  proposed 
lease's  Minimum  Annual  Guarantee  requirement  of 
$4,050,000,  Transportation  Media,  Inc.  must  generate 
annual  revenues  of  approximately  $5,785,714  in  order  to 
achieve  its  30  percent  share3. 


2  Under  the  jet  bridge  advertising  program,  the  Minimum  Annual  Guarantee  of  $2,887,500  to  the 
Airport  represents  annual  revenue  for  the  Airport  in  the  amount  of  $37,500  for  each  of  the  77  jet 
bridges.  The  airlines  are  guaranteed  an  equivalent  amount.  Since  the  gross  advertising  revenues 
are  to  be  split  35  percent  for  tbe  Airport,  35  percent  for  the  airlines,  and  30  percent  for 
Transportation  Media,  Inc.,  given  the  Minimum  Annual  Guarantees  of  $2,887,500  for  each  of  the 
Airport  and  the  airlines,  Transportation  Media,  Inc.  must  generate  total  advertising  revenues  of 
$8,250,000  in  order  to  achieve  its  30  percent  share  ($2,475,000). 

3  Under  the  proposed  advertising  program  lease,  the  amount  of  $4,050,000  is  approximately  70 
percent  of  $5,785,714.  Under  the  proposed  lease,  in  Year  1,  Transportation  Media  Inc.  must  pay  a 
Minimum  Annual  Guarantee  of  $4,050,000,  or  70  percent  of  its  gross  revenues,  whichever  amount  is 
more. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

70 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


4.  The  Minimum  Annual  Guarantee  of  $4,050,000  in 
Year  1  represents  an  average  of  approximately  $28,125 
per  year  for  each  of  the  144  advertising  sites.  According 
to  Mr.  Rhoades,  the  actual  charges  made  for  each  of  those 
144  advertising  spaces  will  be  determined  by  rate  cards 
which  are  set  according  to  market  values.  The  proposed 
lease  provides  for  Airport  verification  of  gross  advertising 
revenues  through  (a)  a  monthly  gross  receipts  report 
signed  by  the  Lessee,  (b)  an  unqualified  year-end  report 
certified  by  a  certified  public  accountant,  (c)  periodic 
audits  of  the  Lessee's  gross  receipts,  and  (d)  other  reports 
and  submissions  requested  at  the  discretion  of  the  Airport 
Director. 

5.  The  Budget  Analyst  questioned  why  the  jet  bridge  - 
advertising  program  contract  between  the  airlines  and 
Transportation  Media,  Inc.  (in  contrast  to  the  subject 
proposed  lease  between  the  Airport  and  Transportation 
Media,  Inc.),  and  the  resulting  revenues  of  at  least 
$2,887,500  a  year  for  the  Airport,  were  not  subject  to 
Board  of  Supervisors  approval.  Mr.  Rhoades  states  that 
the  jet  bridge  advertising  contract  is  between  the  airlines 
and  Transportation  Media,  Inc.  and  that  the  Airport  is 
not  a  party  to  that  contract.  With  regard  to  the  Airport's 
ability  to  receive  revenues  from  the  jet  bridge  advertising 
program  without  first  obtaining  Board  of  Supervisors 
approval,  Ms.  Mara  Rosales  and  Ms.  Adrienne  Go  of  the 
City  Attorney's  Office  state  that  the  Airport's  legal 
authority  to  receive  such  revenues  stems  from  the 
Airport's  Lease  and  Use  Agreements  with  the  airlines, 
which  were  previously  approved  by  the  Board  of 
Supervisors  in  1981.  According  to  Ms.  Rosales  and  Ms. 
Go,  under  these  Lease  and  Use  Agreements,  the  Airport 
Director  has  the  authority  to  consent  to  variations  to  the 
prescribed  uses  of  the  Airport  space  leased  by  the  airlines. 
Therefore,  Ms.  Rosales  and  Ms.  Go  state  that,  as  a 
condition  to  granting  his  consent  to  such  advertising,  the 
Airport  Director  required  the  airlines  to  share  a 
negotiated  percentage  of  the  resulting  revenues  with  the 
Airport.  In  requiring  a  share  of  the  advertising  revenues 
in  return  for  allowing  the  airlines  to  advertise  on  the  jet 
bridges,  the  Airport  Director  has  acted  within  the  scope  of 
the  Lease  and  Use  Agreements  previously  approved  by 
the  Board  of  Supervisors.  Therefore,  Ms.  Rosales  and  Ms. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

71 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


Go  state  that  the  jet  bridge  advertising  revenues  of  at 
least  $2,887,500  to  be  received  by  the  Airport  directly 
from  the  airlines  do  not  require  separate  Board  of 
Supervisors  approval. 


Recommendation:  Approve  the  proposed  resolution. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

72 


JAN.04'2001  15:55  650  794  4519 


CONCESSION  DEV  i   MGMT 


Attachment  I 


SFO 


San  Francisco  International  Airport 


MEMORANDUM 


P.O.Sox  8097 
San  Francisco,  CA  94128 
Tel  650.821.5000 
Fax  6S0. 821. 5005 

wvAv.flysfo.com 


AIRPORT 
COMMISSION 

CITY  ANO  COUNTY 
OtSAN  FRANCISCO 

WIIU5  li  JROWN.ffl. 


TO: 


FROM: 


Alan  Gibson 
Budget  Analyst       /j 

Bob  Rhoades 

Deputy  Airport  Director 

Business  Division 


SUBJECT:     Request  for  Proposal  Response 


DATE:    January  4,  2001 


HENRY  E.  6ERMAN 
PPtSIOCNT 


LARRY  MAZiOLA 
V'Cf  PR($I0CNT 


MICHAEL  S.  5TRONSKY 


LINDA  S.CRAYTON 


JOHN  L.MARTIN 
AIRPORT  OIBCCTOn 


This  is  in  response  to  your  email  dated  January  3,  2001 ,  regarding  "further  information 
request".  This  memorandum  is  addressing  question  no.  2,  pertaining  to  Transportation 
Media,  Inc.,  being  the  sole  response  to  the  Airport  Advertising  Request  for  Proposal. 

On  June  28,  2000,  the  Airport  conducted  a  pre-proposal  conference  for  the  Airport 
Advertising  Program.  Through  Concession  Development  and  Management's  outreach, 
twenty- five  companies  were  identified  through  a  national  search  and  were  issued  the  pre- 
proposa]  document. 

Seven  advertising  companies  responded  and  attended  the  pre-proposal  informational 
conference  (a  list  of  the  companies  have  been  emailed  to  you).  Transportation  Media, 
Inc.  was  the  only  company  to  respond  and  to  participate  in  the  proposal  process  of  the 
Airport  Advertising  Program. 

Separately,  Transportation  Media,  Inc.  and  JCDecaux/SkySites  participated  m  a  separate 
request  for  proposal  issued  and  awarded  (on  behalf  of  the  airlines)  the  loading  bridge 
advertising  program.  Transportation  Media,  Inc.,  being  the  successful  proposer,  was 
awarded  with  this  operating  agreement. 


cc:  Patrick  Quinn 

Concession  Development  and  Management 


73 


JAN.04'2001  15:55  650  794  4519 


CONCESSION  DEV  I   HGMT 


Attachment 


San  Francisco  International  Airport 


MEMORANDUM 


P.O.  Box  6097 

S*n  Francisco.  CA  94128 

Tel  650.821. SOOO 

Fax  650.821.5005 

www.flyjfo.com 


DATE:  January  4,  2001 


Amronr 

COMMISSION 
CITY  ANO  COUNTY 
OF  SAN  FRANCISCO 

WILL  if  L.BROWN.  JR. 
MAYOR 

henry  j.  hum 

LARKY  MAZZOLA 
Vice  PRCSIDENT 

MICHAtl  5.  5THUNJltr 

LINQA  S.CHAYTON 


JOHN  L  MARTIN 

aikcoht  omecTOK 


TO:  Alan  Gibson 

Budget  Analyst 

FROM:  Bob  Rhoades 

Deputy  Airport  Director 
Business  Division 


SUBJECT:     Loading  Bridges 

In  response  to  your  email  dated  January  3,  2001,  regarding  "further  information  request", 
this  memorandum  is  addressing  question  no.3,  pertaining  to  the  legal  authority  the 
airlines  control  the  loading  bridge  advertising  space  and  revenues. 

In  February  2000,  the  Airport  amended  its  long  standing  position  on  commercial 
advertising  in  certain  non-terminal  areas.  One  of  the  areas  the  airport  expanded  included 
the  airline-owned  loading  bridges  in  the  domestic  terminals.  In  order  to  allow  the  airlines 
to  commercially  advertise  in  their  loading  bridges,  the  airport  made  an  agreement  with 
the  airlines  that  all  revenues  would  be  split  in  half  between  the  Airport  and  the  airlines. 
In  return,  the  Airport  provided  the  airlines  the  same  opportunity  with  the  loading  bridges 
in  the  international  terminal,  which  the  Airport  owns. 

AvAirPros  conducted  a  Request  for  Proposal  (RFP)  for  the  loading  bridges  on  behalf  of 
the  airlines  to  facilitate  the  RFP  process.  The  contract  had  three  proposers: 
Transportation  Media,  Inc.,  A  Division  of  Eller  Media;  JCDecaux  -  SkySites;  and 
InPlaneView.  Transportation  Media,  Inc.  was  awarded  the  contract  based  on  their 
proposal. 


74 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


Item  11  -  File  00-1252 

Department: 

Item: 


Amount: 
Source  of  Funds: 
Description: 


Port  of  San  Francisco 

Hearing  to  consider  the  release  of  reserved  funds  in  the  amount 
of  $460,000  for  fire  protection  improvements  at  Pier  50, 
including  construction  of  a  12  inch  ductile  iron  water  main  at 
Pier  50,  for  use  as  part  of  the  $1,101,000  Piers  48  and  50  Fire 
Protection  Project. 

$460,000 

San  Francisco  Harbor  Operating  Fund 

In  November  of  1996,  (File  101-96-19)  the  Board  of  Supervisors 
placed  $1,329,000  on  reserve  for  capital  improvement  projects 
pending  the  Port's  selection  of  contractors  and  the  submission  of 
budget  details.  On  four  occasions  since  that  time,  the  Board  of 
Supervisors  has  released  portions  of  the  reserved  funds  for 
various  projects,  as  indicated  below: 


Description 

Date 

Amount 

Funds  Initially  Placed  on  Reserve 

Nov.  1996 

$1,329,000 

Date 

Amount 

Reserved  Funds  Released 

Released 

Released 

-Pier  1  lA,  Emergency  Wall  Repairs 

May  1998 

$137,960 

-Pier     47-A,     Design     Services     for 

Reconstruction  of  Pier 

May  1998 

39,622 

-Agricultural  Building  Design  Work 

May  1998 

26,000 

-Agricultural    Building    East    Entry 

Stair  Replacement 

May  2000 

202,900 

Total  Amount  Released 

406.482 

Remaining  Reserved  Funds 


$922,518 


According  to  Ms.  Imani  Haygood  of  the  Port,  $460,000  of  these 
funds  were  originally  allocated  in  the  Port's  FY  1996-1997 
Capital  Projects  budget  for  construction  of  fire  walls  at  Pier  50, 
Shed  A  to  improve  fire  protection  at  the  Port.  After  reviewing 
the  project,  however,  the  Fire  Marshall  approved  a  sprinkler 
system  as  the  best  method  of  fire  protection  at  Pier  50. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

75 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 

Tbe  proposed  release  of  reserved  funds  would  release  $460,000 
of  the  remaining  $922,518  in  reserved  funds  to  contribute  a 
portion  of  the  total  of  $1,101,000  in  total  funds  required  to 
design  and  construct  a  sprinkler  system,  as  well  as  other 
improvements  at  Pier  50.  Specifically,  components  of  the  project 
would  include  (a)  replacement  of  the  current  eight  inch  water 
main  with  a  12  inch  ductile  iron  water  main1,  (b)  installation  of 
a  new  fire  sprinkler  system  for  Pier  50,  Shed  A,  (c)  installation 
of  new  alarms  and  fire  controls  for  Pier  50,  Sheds  A  and  D,  (d) 
consultation  by  the  San  Francisco  Water  Department  (see 
Comment  No.  2),  and  (e)  design  consultation  for  construction. 
The  proposed  release  of  $460,000  in  reserved  funds  plus 
$394,000  in  existing  capital  appropriations  plus  $247,000  in 
funds  received  from  a  fire  insurance  settlement  would  fund  the 
total  project  cost  of  $1,101,000. 

The  subject  release  of  reserved  funds  would  leave  a  total  of 
$462,518  remaining  on  reserve  ($922,518  in  currently  reserved 
funds  less  $460,000  in  funds  requested). 

Budget:  A  summary  project  budget  and  list  of  project  funding  sources  is 

as  follows: 

Project  Budget 
Construction: 

New  12  inch  ductile  iron  water  main  $588,300 

New     fire     sprinklers,     alarms,     and 

controls  for  Pier  50,  Shed  A  249,600 

New  alarms  and  controls  for  Pier  50, 

Shed  D  16.730 

Total  base  construction  $854,630 

10%  contingency  85.463 

Total  Construction  $940,093 

SFWD  Fire  Main  Services  (actual  cost)  143,000 

Design  Services  (actual  cost)  17.907 

Total  Project  Budget  $1,101,000 


1  Ductile  cast  iron  is  a  form  of  cast  iron  that  is  less  likely  to  succumb  to  cracking  or  corrosion  than 
older  forms  of  iron.  It  represents  an  improvement  over  the  material  of  which  the  current  eight  inch 
water  main  is  composed. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

76 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 

Project  Funding 

Proposed  Release  of  Reserved  Funds  $460,000 

FY  1999-2000  Port  Capital  Budget  394,000 

Pier  48  Fire  Insurance  Settlement  247,000 

Total  Project  Funding  $1,101,000 

Comments:  1.   According  to  Ms.  Haygood,  the  proposed. project  is  anticipated 

to  commence  on  or  around  February  1,  2001,  and  is  expected  to 
be  completed  by  April  30,  2001. 

2.  Ms.  Haygood  states  that  the  $143,000  budgeted  for  the  San 
Francisco  Water  Department  represents  payment  for 
engineering  review  and  approval  of  proposed  fire  suppression 
improvements,  some  materials  for  integrating  the  proposed  12 
inch  water  main  into  the  City's  water  infrastructure,  and  other 
miscellaneous  engineering  fees.  According  to  Ms.  Haygood,  the 
$17,907  the  Department  expended  for  design  services  was  for 
design  work  conducted  by  the  Utilities  Engineers  Bureau  of  the 
Public  Utilities  Commission  (PUC).  According  to  Ms.  Haygood, 
the  services  provided  by  the  Water  Department  and  the  Utilities 
Engineers  Bureau  were  completed  in  March  of  2000.  These 
services  were  funded  from  FY  1999-2000  Port  Capital  Budget 
funds  previously  appropriated  and  allocated  for  the  subject 
$1,101,000  project,  according  to  Ms.  Haygood. 

3.  According  to  Ms.  Haygood,  on  September  14,  2000,  the  Port 
issued  an  Invitation  for  Bids  to  construct  fire  protection 
improvements  as  part  of  the  Piers  48  and  50  Fire  Protection 
Project.  A  Request  For  Proposal  (RFP)  was  sent  to  the  list  of 
approved  Human  Rights  Commission  (HRC)  contractors, 
minority  newspapers,  trade  journals  and  construction-related 
publications.  The  subcontracting  goals  for  this  project  were  17 
percent  MBE  participation  and  six  percent  WBE  participation. 
On  October  31,  2000  the  Port  received  four  bids.  The  Port 
engineering  staff  and  the  HRC  reviewed  the  submitted  bids,  and 
selected  D'Arcy  and  Harty,  Inc.,  who  bid  $854,630  as  the  lowest, 
responsive  bidder  meeting  the  Project  subcontracting  goals.  The 
following  table  lists  the  contractors  that  responded  to  the  Port's 
RFP,  and  their  respective  bids: 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

77 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


Contractor 

Quote 

Bidding 
Discounl 

Net  Final 

Bid 

D'Arcy    &    Harty 
Construction,  Inc. 

$854,630 

5%  LBE 

$811,899 

Proven  Management,  Inc. 

931,250 

10%  MBE 

838,125 

Alpha  Bay  Builders,  Inc. 

947,819 

10%  MBE 

853,037 

A.Y.  Seto  Corporation 

1,864,000 

10%  MBE 

1,677,600 

Recommendation: 


The  Attachment,  provided  by  the  Port,  is  the  bid  summary 
document  for  the  construction  contract  amount  of  $854,630. 

4.  According  to  Ms.  Haygood,  the  water  main  that  currently 
supplies  Sheds  A  and  D  at  Pier  50  is  eight  inches  in  diameter, 
and  has  suffered  some  corrosion  since  it  was  initially  installed  in 
1926.  Further,  Ms.  Haygood  reports  that  the  current  eight  inch 
main  is  not  large  enough  to  supply  Pier  50  the  volume  of  water 
necessary  for  proper  operation  of  the  proposed  sprinkler  system. 
The  proposed  release  of  reserved  funds  would  allow  the  Port, 
along  with  other  improvements,  to  replace  the  eight  inch  main 
with  a  12  inch  ductile  iron  water  main,  which  would  have  the 
capacity  to  supply  an  adequate  volume  of  water  to  the  proposed 
sprinkler  system  at  Pier  50,  Shed  A.  Ms.  Haygood  notes  that,  in 
addition  to  providing  additional  fire  protection  to  the  Port,  the 
new  water  main  would  also  supply  irrigation  water  to  the  new 
China  Basin  Shoreline  Park,  which  is  currently  under 
construction.  Ms.  Haygood  states  that  the  new  irrigation  system 
would  consist  of  sprinklers  and  other  systems  to  supply  grass 
and  trees  located  at  the  park  with  adequate  supplies  of  water. 

Approve  the  requested  release  of  reserved  funds. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

78 


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Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


Item  12  -  File  00-2163 

Department: 

Item: 


Services  to  be 
Performed: 


Description: 


District  Attorney 

Resolution  concurring  witb  the  Controller's  certification 
that  assistance  to  certain  victims  of  crime  and  education 
in  community  anti-street  violence  can  continue  to  be 
practically  performed  for  the  District  Attorney's  Victim 
Witness  Assistance  Program  by  a  private  contractor  for  a 
lower  cost  than  similar  work  services  performed  by  City 
employees. 

Victim  Witness  Services  for  the  District  Attorney's  Victim 
Witness  Assistance  Program 

Victim  Witness  Services  for  the  District  Attorney's  Victim 
Witness  Assistance  Program  consist  of  helping  lesbian, 
gay,  bisexual,  and  transgender  victims  and  witnesses  to 
cooperate  with  the  criminal  justice  system  in 
prosecutions. 

Charter  Section  10.104  provides  that  the  City  may 
contract  with  private  firms  for  services  that  can  be 
practically  performed  for  a  lower  cost  than  similar  work 
performed  by  City  employees. 

The  Controller  has  determined  that  contracting  with 
Victim  Witness  Services  for  FY  2000-2001  would  result  in 
estimated  savings  as  follows: 


City-Operated  Service  Costs 
Salaries 
Fringe  Benefits 
Total 

Contractual  Services  Cost 

Estimated  Savings 


Lowest 
Salary 
Step 
$137,656 
37.485 


Highest 
Salary 

Step 
$163,176 
41.497 


$175,141        $204,673 

(113.175)        (114.488) 

$61,966  $90,185 


BOARD  OF  SUPERVISORS 

BUDGET  ANALYST 

80 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


Comments: 


1.  A  contract  for  Victim  Witness  Services  was  first 
certified  under  Proposition  J  as  required  by  Charter 
Section  10.104  in  1981  and  such  services  have  been 
provided  by  an  outside  contractor,  Community  United 
Against  Violence  (CUAV),  a  non-profit  corporation,  since 
that  time.  Ms.  Linda  Alexander  of  the  District  Attorney's 
Office  advises  that  Victim  Witness  Services  are  provided 
on  a  sole-source  basis  by  CUAV.  According  to  Ms. 
Alexander,  since  1981  CUAV  has  been  the  sole  provider  of 
(a)  assistance  to  lesbian,  gay,  bisexual,  and  transgender 
victims  of  crime  and  (b)  hate-crime  prevention  services, 
and  is  therefore  uniquely  qualified  to  provide  such 
services. 


2.  The  Contractual  Services  Cost  used  for  the  purpose  of " 
the  analysis  is  based  on  (a)  CUAVs  estimated  FY  2000- 
2001  costs  to  provide  victim  witness  services,  and  (b)  the 
salary  and  fringe  benefits  of  0.1  FTE  8131  Victim  Witness 
Investigator  II  position  in  the  District  Attorney's  Office  to 
monitor  the  contract. 

3.  The  one-year  contract  with  CUAV  for  FY  2000-2001 
commenced  on  July  1,  2000.  Therefore,  the  proposed 
resolution  should  be  amended  to  provide  for  retroactivity. 
According  to  Ms.  Alexander,  delays  in  processing  the 
contract  resulted  in  a  delay  in  bringing  the  proposed 
resolution  to  the  Board  of  Supervisors.  The  Budget 
Analyst  notes  that  the  District  Attorney's  office  has 
submitted  the  above  contract,  after  that  contract  has 
begun,  each  of  the  last  three  years.  The  budget  analyst 
further  notes  that  the  Department  has  provided  the  same 
explanation  of  this  for  action  each  of  the  last  three  years. 


Recommendation: 


4.  The  Attachment  to  this  report,  provided  by  the  District 
Attorney's  Office,  is  the  Controller's  supplemental 
questionnaire,  with  the  responses  from  the  District 
Attorney's  Office. 

Amend  the  proposed  resolution  to  provide  for  retroactivity 
and  approve  the  proposed  resolution  as  amended. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

81 


t\  ,_  <_d.V_il.lii. L 


CHARTER  10.104.15  (PROPOSITION  J)  QUESTIONNAIRE 

DEPARTMENT:        District  Attorney'?;  Office 

CONTRACT  SERVICES:  Community  United  Against  Violence_ 
CONTRACT  PERIOD:  July  1 .  9000  thru  June  30.  2001 

(1)  Who  performed  the  activity/service  prior  to  contracting  out? 
No  one  performed  these  services  prior  to  CUAV. 

(2)  How  many  City  employees  were  laid  off  as  a  result  of  contracting  out? 

There  have  not  been  and  will  not  be  any  City  employees  laid  off  as  a  result  of  the 
contract. 

(3)  Explain  the  disposition  of  employees  if  they  were  not  laid  off. 
N/A 

(4)  What  percentage  of  City  employees'  time  !s  spent  of  services  to  be  contracted  out? 
N/A 

(5)  How  long  have  the  services  been  contracted  out?  Is  this  likely  to  be  a  one-time  or  an  ongoing 
reque.it  for  contracting  out? 

The  services  have  been  contracted  out  since  1983.  This  is  an  on-going  contract  with 
annual  requests. 

(6)  What  '.ras  the  first  fiscal  year  for  a  Proposition  J  certification?  Has  it  been  certified  for  each 
subsequent  year? 

The  contract  precedes  Proposition  J.  The  Contract  has  been  certified  each  year  since 
Proposition  J  passed. 

(7)  How  will  the  services  meet  the  goals  of  your  MBE/WBE  Action  Plan? 

CUAV  is  a  501  ©3  non-profit.  I  do  not  believe  it  falls  under  MBEAA/BE  categories  (as  it 
is  not  "owned").  50%  of  the  Board  are  people  of  color. 

(8)  Does  lhe  proposed  contract  require  that  the  contractor  provide  health  insurance  for  its  employees? 
Even  If  not  required,  are  health  benefits  provided? 

CUAV  provides  health  insurance  for  it's  employees. 

(9)  Does  lhe  proposed  contractor  provide  benefits  to  employees  with  spouses?  If  so,  are  the  same 
benefits  provided  to  employees  with  domestic  partners?  If  not,  how  does  the  proposed  contractor 
compi/  with  the  Domestic  Partners  ordinance? 

The  contractor  complies  with  the  Domestic  Partnership  ordinance,  providing  benefits  to 
both  spouses  and  domestic  partners. 

Department  Representative:  Linda  Alexander 
Telephone  Number  (41.^  553-9044 


82 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 

Item  13  -  File  00-2186 


Department: 


Item: 


Department  of  Telecommunications  and 
Information  Services  (DTIS) 

Department  of  Administrative  Services,  Real 
Estate  Division  (RED) 

Resolution  authorizing  exercise  of  option  regarding 
an  extension  an  existing  lease  at  One  Market 
Plaza,  on  behalf  of  the  Department  of 
Telecommunications  and  Information  Services. 


Location: 

Lessor: 

Lessee: 

Purpose  of  Lease: 


One  Market  Plaza 

EOP-One  Market,  L.L.C.,  a  Delaware  Corporation 

City  and  County  of  San  Francisco,  DTIS 

Space  for  the  operation  of  the  primary  data  center 
for  networked  computer  and  telecommunications 
systems  used  by  the  City  and  County  of  San 
Francisco. 


No.  of  Square  Feet 
and  Cost  Per  Month 
Payable  by  the  City 
to  EOP-One  Market: 


Term  of  Original 
Lease: 

Term  of  Proposed 
Extension: 


Right  of  Renewal: 

Utilities  and  Janitor 
Services: 


19,051  square  feet  at  approximately  $127,007  per 
month  (approximately  $6.67  per  square  foot  per 
month)  or  approximately  $1,524,080  annually.  The 
rent  would  be  adjusted  annually  for  any  increases 
in  operating  and/or  Property  Tax  costs,  not  to 
exceed  five  percent  over  any  previous  year. 

May  12,  1993  through  January  31,  2001,  with  two 
five-year  options  to  extend. 

February  1,  2001  through  January  31,  2006  (the 
first  of  two  five-year  options  to  extend). 

One  additional  five-year  term,  from  February  1, 
2006  through  January  31,  2011. 

Landlord  pays  standard  building  services  and 
utilities,  with  the  exception  of  special 
environmental  services  necessary  for  data  center 

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BUDGET  ANALYST 

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Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


Description: 


Comments: 


operations  (such  as  high  volume  air  conditioning 
and  power  requirements)1. 

In  1993,  the  Board  of  Supervisors  authorized  the 
Director  of  Property  to  enter  into  a  lease  that 
allowed  the  relocation  of  the  DTIS  City  data  center 
from  the  basement  of  City  Hall  to  One  Market 
Plaza  (File  No.  64-93-5).  The  proposed  resolution 
would  authorize  the  Department  to  exercise  the 
first  of  two  five-year  options,  extending  the  current 
lease  from  February  1,  2001  through  January  31, 
2006.  Unless  extended,  the  current  lease  will 
expire  on  January  31,  2001. 

1.  According  to  Mr.  Steve  Legnitto  of  RED,  under 
the  terms  of  the  original  lease,  the  City  assumed 
occupancy  of  One  Market  Plaza  for  an  initial  period 
of  approximately  7  years  and  8V2  months  at  the 
rate  of  $15.50  per  square  foot,  annually,  or 
approximately  $1.29  monthly.  Under  the  terms  of 
this  lease,  the  City  is  allowed  two  options  to  extend 
for  five  years  each,  with  the  rent  to  be  adjusted  for 
each  five-year  extension  period  to  a  mutually 
agreed  upon  fair  market  rate,  according  to  Mr. 
Legnitto. 

2.  According  to  Mr.  Legnitto,  the  proposed  lease 
rate  of  $6.67  per  square  foot  per  month,  or  $80  per 
square  foot  annually,  which  is  an  increase  of 
approximately  416  percent,  represents  fair  market 
value.  According  to  Mr.  Legnitto,  DRE  initially 
rejected  the  proposed  rate  of  $80  per  square  foot 
annually  as  too  high.  After  an  extensive  review  of 
available  market  data,  however,  DRE  determined 
that  the  landlord's  estimate  of  market  value  was 
considered  to  be  the  fair  market  value,  according  to 
Mr.  Legnitto.  Mr.  Legnitto  notes  that  subsequent 
to  settling  on  the  rate  of  $80  per  square  foot 
annually  for  the  proposed  lease  extension,  two 
other  tenants  entered  into  leases  at  One  Market 


'  According  to  Mr.  Steve  Legnitto  of  RED,  electricity,  gas  and  water  costs  are  split  between  the  landlord 
and  the  City  according  to  a  formula  that  determines  a  standard  level  of  use  for  office  space.  The  landlord 
pays  for  "normal  office  use"  of  those  utilities,  and  the  City  pays  for  use  that  is  in  excess  of  this  standard 
level  of  use  for  office  space. 

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Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


Plaza  at  the  rates  of  $90  and  $115  per  square  foot 
annually. 

3.  Under  the  original  lease  agreement,  the  City  is 
currently  paying  $15.50  per  square  foot  annually 
(approximately  $1.29  per  square  foot  per  month)  for 
a  total  annual  rent  of  $295,290.  The  proposed  lease 
rate  would  therefore  represent  an  increase  of 
$64.50  per  square  foot  annually  ($80  less  the 
current  rate  of  $15.50),  or  a  total  increase  of 
$1,228,790  annually  ($1,524,080  less  the  current 
annual  rate  of  $295,290)  or  an  approximate  416 
percent  increase  over  the  current  lease  rate.  Mr. 
Legnitto  explains,  however,  that  DTIS  initially 
took  occupancy  of  the  space  under  extremely 
favorable     circumstances.  According     to     Mr. 

Legnitto,  the  prior  tenant  of  One  Market  Plaza, 
The  Del  Monte  Corporation,  had  used  the  subject 
space  as  a  data  center.  Consequently,  many 
existing  infrastructure  improvements  to  the  space 
that  are  particular  to  data  center  operations  were 
already  in  place.  Additionally,  Mr.  Legnitto  notes 
that  Del  Monte  was  in  the  process  of  downsizing  its 
operations,  and,  for  purposes  of  expediency, 
arranged  for  DTIS  to  assume  occupancy  of  the 
property  for  approximately  half  the  market  rate  at 
that  time,  according  to  Mr.  Legnitto2.  While  the 
current  rent  paid  by  the  City  for  One  Market  Plaza 
under  the  original  lease  is  $15.50  per  square  foot, 
annually,  Mr.  Legnitto  estimates  the  fair  market 
value  of  One  Market  Plaza  in  1993  was  roughly  $30 
per  square  foot,  annually. 

According  to  Mr.  Legnitto,  the  large  increase  in 
rent  is  a  result  of  a)  the  City  having  paid 
significantly  below  the  market  rate  in  the  original 
lease  and  b)  significant  rent  increases  in  the 
commercial  real  estate  market  since  1993. 

4.  According  to  Mr.  Legnitto,  the  option  of 
relocating  the  data  center  to  less  expensive  space 
would  not  be  practical  unless  and  until  City-owned 


2  Subsequent  to  the  City  entering  into  the  lease  for  One  Market  Plaza,  the  property  was  sold,  along  with  the 
City's  lease,  to  EOP-One  Market,  LLP,  who  is  the  current  landlord. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

85 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 

space  becomes  available.  Mr.  Legnitto  states  that 
the  eventual  relocation  of  the  DTIS  data  center  will 
be  extremely  costly  because  a)  new  space  must  be 
improved  to  meet  specific  requirements  of  data 
center  operations,  which  includes  addition  of 
special  air  conditioning  and  electrical  systems 
infrastructure3,  and  b)  the  DTIS  data  center 
operates  24  hours  a  day,  and  the  move  would 
require  temporary  duplication  of  many  information 
systems  so  as  not  to  interrupt  or  damage  those 
systems.  Thus,  according  to  Mr.  Legnitto,  because 
the  transaction  costs  associated  with  relocation  of 
the  data  center  are  very  high,  RED  and  DTIS 
would  prefer  to  wait  until  City-owned  space,  such 
as  the  new  City  construction  at  525  Golden  Gate 
Avenue,  is  available  to  ensure  that  the  next 
relocation  of  the  data  center  will  be  permanent. 

5.  According  to  Mr.  Legnitto,  under  the  terms  of 
the  current  lease  the  City  would  have  the  right  to 
sublet  the  current  space  at  One  Market  Plaza  if  the 
City  relocated  the  DTIS  data  center  prior  to 
completion  of  the  proposed  five-year  extension.  Mr. 
Legnitto  notes  that  the  agreement  also  contains  the 
standard  City  contract  provision  which  permits  the 
City  to  terminate  the  lease  in  the  event  of  non- 
appropriation  of  the  necessary  operating  funds. 

6.  According  to  Ms.  Kathryn  Hile  of  DTIS,  the 
funds  DTIS  receives  from  City  Departments  for 
computer  and  telecommunications  services 
rendered  are  from  both  General  Fund  supported 
and  non-General  Fund  supported  departments.  In 
the  aggregate,  these  reimbursements  to  DTIS  from 
City  departments  are  made  up  of  approximately  16 
percent  non-General  Fund  monies  and  84  percent 
General  Fund  monies,  according  to  Ms.  Hile.  Thus, 
Ms.  Hile  estimates  that  84  percent  of  the  cost  of  the 


3  Neither  DTIS  nor  RED  currently  have  current  estimates  as  to  the  expected  cost  of  making  necessary 
improvements  to  any  new  space  for  DTIS.  However,  the  City  and  previous  landlord  made  approximately 
$1,630,965  in  improvements  to  One  Market  Plaza  pnor  to  the  City  taking  occupancy  of  the  site  in  1993. 
These  additional  improvements  were  needed  despite  the  fact  that  extensive  data  center  infrastructure 
already  existed  at  the  site.  Further,  Mr.  Cuni  Takeshita  of  DTIS  states  that  the  Department  made  a  rough 
estimate  in  1998,  and  determined  that  the  cost  of  building  infrastructure  in  a  new  space  and  acquiring 
equipment  necessary  for  moving  the  data  center  would  be  in  excess  of  510,000,000. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 
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Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


proposed  $1,228,790  increase  in  annual  rent,  or 
approximately  $1,032,183  of  tbat  increase,  will 
represent  increased  General  Fund  expenditures. 

7.  According  to  Ms.  Hile,  DTIS  anticipated  an 
increase  in  rent  wben  formulating  its  FY  2000- 
2001  budget,  and  included  in  its  budget  funds 
sufficient  to  meet  the  increased  cost  of  the  proposed 
lease  for  the  last  5  months  of  the  2000-2001  fiscal 
year,  effective  February  1,  2001. 


Recommendation:  Approve  the  proposed  resolution. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

87 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


Item  14 -File  00-2217 

Department: 

Item: 


Amount: 
Source  of  Funds: 
Description: 


Police  (SFPD) 

Hearing  to  consider  the  release  of  reserved  funds  for  the 
Police  Department  in  the  amount  of  $4,297,098  to  fund 
overtime  expenditures. 

$4,297,098 

Police  Department  FY  2000-2001  General  Fund  Budget 

The  SFPD's  FY  2000-2001  General  Fund  budget  includes 

budgeted  overtime  expenditures  of  $12,842,315.  The 
Finance  and  Labor  Committee  placed  a  total  of  $4,297,098 
of  this  amount  on  reserve,  leaving  $8,542,217  available 
for  expenditure. 

The  table  below  provides  a  summary  of  overtime  spending 
to  date  and  projected  spending  for  FY  2000-2001,  as  well 
as  spending  to  date  and  projections  for  all  Police 
Department  General  Fund  Salary  and  Fringe  Benefit 
accounts  based  on  the  Controller's  payroll  records. 


Controller's  Projection  -  Police  Department  General  Fund  Expenditures  for 
Overtime  and  total  Salaries  and  Fringe  Benefits  based  on  Expenditures 

through  December  8,  2000 

Actual 
Expenditures  Projected 

Through  Pay  Expenditures       Projected  Surplus 

FY  2000-2001        Period  Ending      Through  July  30,  (Deficit) 

Budget 12/08/2000 2001  * 


Overtime 

All  Salaries  and  Fringe 
Benefits  Including 
Overtime 


$12,842,315  $7,658,749  $16,587,343  $(3,745,028) 

196,392,203  86,948,008  195,747,064  645,139 


Projection  based  on  spending  at  the  level  of  the  pay  period  ending 
12/08/2000  for  the  remainder  of  the  Fiscal  Year. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

88 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


As  summarized  in  the  table  above,  the  Controller's  latest 
projection  report  for  salary  and  fringe  benefit  expenditures 
(including  overtime)  shows  that: 

•  As  of  the  pay  period  ending  December  8,  2000,  the  SFPD  has 
incurred  General  Fund  overtime  expenditures  of  $7,658,749. 

•  Through  December  8,  2000  (or  11.5  of  26.0  pay  periods  in  FY 
2000-01)  the  SFPD  has  already  expended  59.6  percent  of  its 
total  overtime  appropriation  of  $12,842,315,  and  89.6  percent 
of  its  available,  unreserved  overtime  funding  of  $8,542,217. 

•  Based  on  overtime  expenditures  incurred  during  the  pay 
period  ending  December  8,  2000,  the  Controller's  projection 
indicates  that  the  SFPD  will  spend  a  total  of  $16,587,343  on 
overtime  which  is  29.2  percent  or  $3,745,028  more  than  the 
Department's  total  FY  2000-2001  overtime  appropriation  of 
$12,842,315. 

•  For  all  Salaries  and  Fringe  Benefit  Expenditures,  including 
Overtime,  the  Controller's  projection  indicates  that  the  SFPD 
will  incur  total  expenditures  of  $195,747,064  in  FY  2000- 
2001,  which  is  $645,139  or  0.33  percent  less  than  the  FY 
2000-2001  budget  amount  of  $196,392,203. 

•  The  SFPD  spending  plan  currently  projects  deficit  spending 
for  overtime  of  $3,788,277,  which  is  $43,249  more  than  the 
Controller's  projection.  However,  for  all  Salaries  and  Fringe 
Benefits  (including  overtime)  the  SFPD  projects  a  surplus  of 
only  approximately  $93,480  which  is  $551,659  less  than  the 
Controller's  latest  projected  salary  and  fringe  benefit  surplus 
of  $645,139  (See  Comment  1  below). 

Based  on  a  projected  salary  and  fringe  benefit  surplus  of 
$93,480,  it  is  unlikely  that  the  SFPD  will  require  a 
supplemental  appropriation  in  FY  2000-2001  assuming  the 
Board  of  Supervisors  releases  a  separate  reserve  of  $1,700,195 
for  uniform  salaries  (see  Comment  2  below). 


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BUDGET  ANALYST 

89 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


Comments:  1.         The  SFPD's  projected  FY  2000-2001  surplus  of  $93,480  is 

comprised  of  the  following  elements: 

Projected  Surplus 
Expenditure  Object (Deficit) 

Miscellaneous  Salaries  $      202,042 

Uniform  Salaries  2,567,041 

Temporary  Salaries  (118,264) 

Premium  Pay  (327,154) 

Overtime  (3,788,277) 

Holiday  Pay  161,712 

Fringe  Benefits  1.396.380 
Total  FY  2000-2001  Deficit         $        93,480 

2.  During  the  Finance  and  Labor  Committee's  hearings  on 
the  proposed  FY  2000-2001  budget  in  June  of  2000,  the  Finance 
and  Labor  Committee  reserved  an  additional  $1,700,195 
"pending  a  plan  for  the  hiring  and  training  of  additional  Police 
Officers  to  bring  the  Department's  staffing  up  to  1,971  Police 
Officers  as  required  by  Charter  Section  4.127".  The  SFPD's  FY 
2000-01  budget  proposed  hiring  200  new  Police  Officers. 

3.  The  SFPD  began  FY  2000-2001  with  2,077  Police  Officers 
(excluding  the  Airport  Police).  Since  that  time,  the  Department's 
sworn  staffing  has  changed  as  shown  in  the  table  below: 

Changes  to  Police  Sworn  Staffing  Since  July  1,  2000 
(Excluding  Airport  Police) 

Sworn  Staffing  on  July  1,  2000 2,077 

New  Hires 

Academy  Class  Started  9/18/2000 44 

Attrition: 

Service  or  Disability  Retirement (37) 

Resignations (18) 

Recruits  discharged  from  Academy (7) 

Deaths (2) 

Sworn  Staffing  as  of  January  8,  2001 2,057 

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BUDGET  ANALYST 

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Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


In  addition  to  the  current  sworn  staffing  of  2,057,  the  SFPD 
hired  46  new  recruits  who  began  the  Police  Academy  on  January 
8,  2001. 

4.  The  SFPD's  hiring  schedule,  presented  to  the  Finance  and 
Labor  Committee  during  the  June  of  2000  budget  hearings, 
projected  that  200  new  Police  Officers  would  be  hired  during  FY 
2000-2001  as  shown  below: 

FY  2000-2001  Police  Hiring  Plan  Presented  to  Finance 
and  Labor  Committee  in  June  of  2000 

Number  of  Police  Officers 
Date  Scheduled  for  Hire 

9/1/2000 40  new  recruits 

10/28/2000 20  lateral  transfers 

11/25/2000 40  new  recruits 

3/03/2001 40  new  recruits 

3/31/2001 20  lateral  transfers 

06/09/2001 40  new  recruits 

Total 200  new  hires 

As  noted  above,  to  date,  the  SFPD  has  actually  hired  a  new 
recruit  class  of  44  (on  September  18,  2000)  and  a  second  new 
recruit  class  of  46  (on  January  8,  2001)  for  a  total  of  90  new 
hires  during  FY  2000-2001.  Of  the  new  recruit  class  of  44  hired 
on  September  18,  2000,  seven  were  released  from  the  Police 
Academy  during  their  initial  training  period. 

The  original  hiring  plan  has  been  revised  by  the  SFPD  since  it 
was  presented  to  the  Finance  and  Labor  Committee  in  June  of 

2000.  During  the  remainder  of  the  current  fiscal  year,  the  SFPD 
hiring  projection  calls  for  the  hiring  of  115  additional  Police 
Officers,  including  25  lateral  transfers  in  March  of  2001;  45  new 
recruits  in  April  of  2001  and  45  new  recruits  in  late  June  of 

2001.  If  this  hiring  schedule  is  met,  the  SFPD  will  have  hired  a 
total  of  205  (90  plus  115)  new  Police  Officers  during  FY  2000- 
2001  or  5  more  than  originally  anticipated.  As  noted  above, 
seven  of  the  44  new  recruits  were  released  from  the  Academy 
class  that  began  September  18,  2000,  and  it  would  be  expected 
that  some  of  the  new  hires  during  the  remainder  of  this  Fiscal 


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BUDGET  ANALYST 

91 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 

Year  would  likewise  not  complete  tbeir  initial  training  for  a 
variety  of  reasons. 

The  current,  revised  SFPD  Hiring  Plan  is  summarized  in  the 
table  on  the  following  page. 


FY  2000-2001  Revised  Police  Actual  Hires  and  Hiring 
Plan  as  of  January  8,  2001  

Number  of  Police  Officers 
Date  Scheduled  for  Hire 

Hired 

9/18/2000 44  new  recruits 

1/08/2001 46  new  recruits 

Planned  Hires 

March  of  2001 25  lateral  transfers 

April  of  2001 45  new  recruits 

June  of  2001 45  new  recruits 

Total 205 


5.  According  to  Captain  John  Goldberg,  Commanding  Officer 
of  the  SFPD  Fiscal  Division,  the  SFPD  is  currently  preparing  a 
potential  request  for  the  expenditure  of  approximately  $800,000 
in  order  to  strengthen  the  SFPD's  recruitment  and  hiring  efforts 
using  the  Finance  and  Labor  Committee's  reserve  of  $1,700,195 
discussed  in  Comment  2,  above  as  a  source  of  funds.  However, 
as  noted  previously  in  this  report,  the  SFPD's  spending  plan 
currently  results  in  a  projected  yearend  surplus  of  only  $93,480 
assuming  that  the  reserve  of  $1.700,195  is  released  bv  the 
Finance  and  Labor  Committee.  Therefore,  a  request  for  new 
funding  of  an  estimated  $800,000  for  recruitment  and  hiring 
would  require  a  supplemental  appropriation  unless  additional 
funds  can  be  identified  within  the  SFPD's  existing  budget. 


BOARD  OF  SUPERVISORS 

BUDGET  ANALYST 

92 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


6.  The  Budget  Analyst  has  reviewed  the  SFPD's  FY  2000- 
2001  spending  plan  which,  as  noted  previously,  results  in  a 
projected  salary  and  fringe  benefit  surplus  of  $93,480,  and 
therefore  the  SFPD  will  not  require  a  supplemental 
appropriation  in  FY  2000-2001.  This  assumes  that  the  Board  of 
Supervisors  releases  the  previously  noted  reserve  of  $1,700,195 
for  uniform  salaries.  However,  in  reviewing  the  Department's 
spending  plan,  the  Budget  Analyst  has  found  that  the  SFPD  has 
not  accounted  for  and  included  all  of  the  General  Fund  resources 
currently  approved  in  the  Department's  FY  2000-2001  budget. 
Specifically,  the  spending  plan  estimates  yearend  total 
expenditures  based  on  year  to  date  total  General  Fund  spending 
on  salaries  (including  overtime)  and  fringe  benefits,  through  the 
pay  period  ending  December  8,  2000.  However,  the  SFPD  budget 
includes  a  General  Fund  Annual  Project  appropriation  for  the 
SFPD's  Accelerated  Hiring  Project  which  has  budgeted  General 
Fund  salary  and  benefit  expenditures  of  $582,000.  If  these 
additional  resources,  which  have  not  been  accounted  for  in  the 
SFPD's  FY  2000-2001  spending  plan,  are  incorporated  in  the 
SFPD's  spending  plan,  the  yearend  projected  surplus  of  $93,480 
increases  to  $675,480  ($93,480  plus  the  additional  budget 
resources  of  $582,000).  According  to  Captain  Goldberg,  the 
SFPD  spending  plan  will  be  corrected  to  include  the  General 
Fund  project  resources  contained  in  the  SFPD  budget. 

7.  During  the  review  of  the  proposed  FY  2000-2001  SFPD 
budget  in  June  of  2000,  the  Budget  Analyst  reported  to  the 
Board  of  Supervisors  that  the  Police  Department's  recommended 
appropriation  for  overtime  expenditures  appeared  to  be 
underbudgeted  by  $2,250,000  compared  to  projections  of  FY 
1999-2000  police  overtime  projections  available  at  that  time.  In 
fact,  the  SFPD  is  now  estimating  that  their  overtime  has  been 
underbudgeted  by  $3,788,277.  Also,  the  Budget  Analyst 
recommended  reductions  to  the  SFPD  proposed  FY  2000-2001 
budget  of  $1,645,025,  which  included  reductions  of  $1,338,525 
for  Uniform  Salaries  and  related  Fringe  Benefits.  At  that  time, 
the  Budget  Analyst  noted  that  the  reductions  of  $1,333,525  to 
the  SFPD  proposed  budget  for  Uniform  Salaries  and  related 
Fringe  Benefits  would  not  impair  the  SFPD's  ability  to  fund  its 
planned  hiring  of  200  new  Police  Officers  during  FY  2000-2001. 
As  noted  in  Comment  1  of  this  report,  the  SFPD's  current 
spending  plan  projections  show  an  anticipated  surplus  of 
$2,567,041  for  Uniform  Salaries  and  $1,396,380  for  related 
Fringe  Benefits,  or  a  total  surplus  of  $3,963,421.  This  surplus  is 

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93 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 

projected  even  after  accounting  for  tbe  SFPD  plan  to  complete 
the  scheduled  hiring  of  205  new  Police  Officers  during  the  Fiscal 
Year. 

The  Police  Department  disagreed  with  the  Budget  Analyst's 
recommendation  which  was  not  accepted  by  the  Finance  and 
Labor  Committee.  By  allowing  the  Police  Department  to 
maintain  the  $1,338,545  in  its  budget,  the  Police  Department 
was  able  to  spend  more  money  on  overtime  which  is  presently 
anticipated  to  exceed  the  Police  Department's  budgeted  overtime 
by  $3,788,277,  as  previously  noted. 

Summary:  The   Finance   and  Labor  Committee   has   reserved  a  total  of 

$4,297,098  out  of  the  SFPD's  total  overtime  appropriation  of 
$12,842,315.  The  SFPD  is  now  requesting  a  release  of  that 
reserve.  Based  on  the  rate  of  spending  on  Police  overtime 
between  July  1,  2000  and  December  8,  2000,  the  Controller's 
most  recent  data  result  in  a  yearend  deficit  projection  of 
$3,745,028  in  overtime,  and  a  yearend  surplus  of  $645,139  for 
all  General  Fund  Salaries  and  Fringe  Benefits  including 
overtime. 

The  SFPD's  internal  spending  plan  projections  estimate  that  by 
the  end  of  FY  2000-2001,  the  overtime  deficit  will  be  $3,788,277. 
Overall,  the  SFPD  spending  plan,  once  corrected  to  account  for 
General  Fund  resources  budgeted  for  the  Accelerated  Hiring 
Project,  will  result  in  an  overall  projected  salary  and  benefit 
surplus  of  $675,480.  Therefore,  a  supplemental  appropriation 
will  not  be  required  for  the  SFPD  assuming  a  separate  reserve 
of  $1,700,195  is  released  by  the  Finance  and  Labor  Committee. 
However,  if  the  SFPD  requests  additional  estimated  funding  of 
$800,000  for  recruitment  and  hiring,  a  projected  supplemental 
appropriation  would  be  required  based  on  the  current  projected 
surplus  of  $675,480. 

The  SFPD's  original  budget  for  FY  2000-2001  called  for  the 
hiring  of  200  new  Police  Officers  during  the  fiscal  year.  To  date, 
actual  hiring  has  been  delayed  somewhat,  but  the  SFPD  still 
anticipates  that  they  will  be  able  to  successfully  hire  a  total  of 
205  new  Police  Officers  by  the  end  of  the  Fiscal  Year. 


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94 


Memo  to  Finance  and  Labor  Committee 

January  17,  2001  Finance  and  Labor  Committee  Meeting 


The  Budget  Analyst's  projection  that  Police  Overtime  was 
underbudgeted  by  at  least  $2,250,000  and  that  Uniform  Salaries 
and  related  Fringe  Benefits  was  overbudgeted  by  $1,338,525,  as 
reported  to  the  Finance  and  Labor  Committee  in  June  of  2000 
was,  in  fact,  correct.  This  has  permitted  the  SFPD  to  spend 
substantially  more  money  on  overtime  then  authorized  by  the 
Board  of  Supervisors.  Such  overtime  spending  is  presently 
anticipated  to  exceed  the  Police  Department's  budgeted  overtime 
by  $3,788,277. 

The  Budget  Analyst  will  provide  the  Finance  and  Labor 
Committee  with  an  updated  FY  2000-2001  budget  status  report 
when  tbe  SFPD  submits  their  request  for  release  of  the  separate 
reserve  of  $1,700,195  later  in  the  Fiscal  Year. 


Recommendation:   Approve    the    requested    release    of    $4,297,098    in    reserved 
overtime  funds. 


Harvey  M.  Rose 


Supervisor  Yee 
President  Ammiano 


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95 


City  and  County  of  San  Francisco 

Meeting  Minutes 

Finance  and  Labor  Committee 

Members:  Supervisors  Leland  Yee,  Tom  Ammiano  and  Mark  Leno 
Clerk:  Gail  Johnson 


City  Hall 

1  Dr.  Carlton  B. 

Goodlett  Place 

San  Francisco,  CA 

94102-4689 


Wednesday,  January  24,  2001 


10:00  AM 
Regular  Meeting 


City  Hall,  Room  263 


Members  Present:      Leland  Y.  Yee,  Tom  Ammiano,  Mark  Leno. 


MEETING  CONVENED 

The  meeting  convened  at  10:06  a.m. 

010041        [Memorandum  of  Understanding  Amendment  No.  3  -  Electrical  Workers,  Local  6] 

Ordinance  implementing  Amendment  No.  3  to  the  1997-2001  Memorandum  of  Understanding  between  the 
International  Brotherhood  of  Electrical  Workers,  Local  6  and  the  City  and  County  of  San  Francisco 
reconfirming  the  agency  shop  provision  thereof  effective  July  1,  2000.  (Human  Resources  Department) 
1/5/01 ,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Alice  Villagomez,  Deputy  Director,  Employee 
Relations  Division,  Department  of  Human  Resources. 
RECOMMENDED  by  the  following  vote: 
Ayes:  3  -  Yee,  Ammiano,  Leno 


010042        [Memorandum  of  Understanding  Amendment  No.  3  -  Glaziers,  Local  718] 

Ordinance  implementing  Amendment  No.  3  to  the  1997-2001  Memorandum  of  Understanding  between  the 
Glaziers,  Architectural  Metal  and  Glass  Workers,  Local  Union  718  and  the  City  and  County  of  San  Francisco 
reconfirming  the  agency  shop  provision  thereof  effective  July  1,  2000.  (Human  Resources  Department) 
1/5/01 ,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Alice  Villagomez,  Deputy  Director,  Employee 
Relations  Division,  Department  of  Human  Resources. 
RECOMMENDED  by  the  following  vote: 
Ayes:  3  -  Yee,  Ammiano,  Leno 


010043        [Memorandum  of  Understanding  Amendment  No.  4  -  Laborers,  Local  261] 

Ordinance  implementing  Amendment  No.  4  to  the  1997-2001  Memorandum  of  Understanding  between  the 
Laborers  International  Union,  Local  261  and  the  City  and  County  of  San  Francisco  reconfirming  the  agency 
shop  provision  thereof  effective  July  1,  2000.  (Human  Resources  Department) 
1/5/01,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Alice  Villagomez.  Deputy  Director.  Employee 
Relations  Division,  Department  of  Human  Resources. 
RECOMMENDED  by  the  following  vote: 
Ayes:  3  -  Yee,  Ammiano,  Leno 


City  and  County  of  San  Francisco 


Printed  at  S:  13  PU 


Finance  and  Labor  Committee 


Meeting  Minutes 


January  24,  2001 


010044        [Memorandum  of  Understanding  Amendment  No.  3  -  Machinists,  Local  1414] 

Ordinance  implementing  Amendment  No.  3  to  the  1997-2001  Memorandum  of  Understanding  between  the 
Machinists  Union,  Local  1414,  International  Association  of  Machinists  and  Aerospace  Workers,  Machinists 
Automotive  Trades  District  Lodge  190  and  the  City  and  County  of  San  Francisco  reconfirming  the  agency  shop 
provision  thereof  effective  July  1,  2000.  (Human  Resources  Department) 
1/5/01,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Alice  Vdlagomez.  Deputy  Director,  Employee 
Relations  Division,  Department  of  Human  Resources. 
RECOMMENDED  by  the  following  vote: 
Ayes:  3  -  Yee,  Ammiano,  Leno 


010045         (Memorandum  of  Understanding  Amendment  No.  2  -  Pile  Drivers,  Local  34| 

Ordinance  implementing  Amendment  No.  2  to  the  1997-2001  Memorandum  of  Understanding  between  the  Pile 

Drivers,  Divers,  Carpenters,  Bridge,  Wharf  and  Dock  Builders,  Local  Union  No.  34  and  the  City  and  County  of 

San  Francisco  reconfirming  the  agency  shop  provision  thereof  effective  July  1,  2000.  (Human  Resources 

Department) 

1/5/01 ,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst:  Alice  Vdlagomez,  Deputy  Director,  Employee 
Relations  Division,  Department  of  Human  Resources. 
RECOMMENDED  by  the  following  vote: 

Ayes:  3  -  Yee,  Ammiano,  Leno 


010046         [Memorandum  of  Understanding  Amendment  No.  1  -  Plumbers.  Local  38| 

Ordinance  implementing  Amendment  No.  1  to  the  1997-2001  Memorandum  of  Understanding  between  the 
United  Association  of  Journeymen  and  Apprentices  of  the  Plumbing  and  Pipe  Fitting  Industry,  Local  No.  38 
and  the  City  and  County  of  San  Francisco  reconfirming  the  agency  shop  provision  thereof  effective  July  1, 
2000.  (Human  Resources  Department) 

1/5/01 ,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee 

Heard  in  Committee.  Speakers:  Haney  Rose,  Budget  Analyst;  Alice  Vdlagomez,  Deputy  Director,  Employee 
Relations  Division,  Department  of  Human  Resources. 
RECOMMENDED  by  the  following  vote: 
Ayes:  3  -  Yee,  Ammiano,  Leno 


City  and  County  of  San  Francisco 


Printed  at  5:1.1  P\t  on   .?  .?  fU 


Finance  and  Labor  Committee  Meeting  Minutes  January  24,  2001 


010021        [November  2000  Branch  Library  Bond  Program] 
Supervisor  Yee 

Hearing  to  determine  and  ensure  that  the  voters'  intent  in  approving  the  November  2000  Branch  Library  Bond 
Program  is  honored  by  the  San  Francisco  Public  Library  and  the  San  Francisco  Library  Commission;  and  to 
receive  information  from  the  San  Francisco  Public  Library  about  where  they  intend  to  get  the  funds  to 
implement  both  the  first  and  second  phases  of  improvements  to  the  Main  Library. 
1  /2/01 ,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Susan  Hildreth,  Acting  City  Librarian; 
Edward  Harrington,  Controller;  Chris  Ortiz,  Member,  Council  of  Neighborhood  Libraries;  Sue  Cauthen, 
Member,  Council  of  Neighborhood  Libraries;  Peter  Warfield;  Chuck  Forrester,  Executive  Director,  Friends 
and  Foundation  of  Library;  Deborah  Doyle,  Member  of  Board,  Friends  and  Foundation  of  Library  and 
Council  of  Neighborhood  Libraries;  Ellen  Hubert,  Member  of  Board,  Friends  and  Foundation  of  Library; 
Theodore  Lakey,  Deputy  City  Attorney. 

CONTINUED  TO  CALL  OF  THE  CHAIR  by  the  following  vote: 
Ayes:  3  -  Yee,  Ammiano,  Leno 


ADJOURNMENT 


The  meeting  adjourned  at  11:01  a.m. 


City  and  County  of  San  Francisco  3  flimted  at  5:1  J  PM  on    <  w'J 


[Budget  Analyst  Report] 

Susan  Horn 

Main  Library-Govt.  Doc.  Section 

DOCUMENTS  DEPT 

CITY  AND  COUNTY  '^^MMIir^'       0F  SAN  FRANCISCO 


3 


JAN  2  3  2001 

BOARD  OF  SUPERVISORS  SAN  FRANCISCO 

PUBLIC  LIBRARY 
BUDGET  ANALYST 

1390  Market  Street,  Suite  1025,  San  Francisco,  CA  94102  (415)  554-7642 

FAX  (415)  252-0461 

January  18,  2001 

TO:  'Finance  and  Labor  Committee 

FROM:        ,  Budget  Analyst 

SUBJECT:  January  24,  2001  Finance  and  Labor  Committee  Meeting 

Items  1.  2.  3.  4.  5  and  6  -  Files  01-0041.  01-0042.  01-0043.  01-0044.  01-0045 
and  01-0046 

Department:  Department  of  Human  Resources  (DHR) 

Items:  File  01-0041:  Ordinance  implementing  Amendment 

No.  3  to  the  FY  1997-2001  four  year  Memorandum 
of  Understanding  between  the  International 
Brotherhood  of  Electrical  Workers,  Local  6  and  the 
City  and  County  of  San  Francisco  reconfirming  the 
Agency  Shop  provision  thereof  effective  July  1, 
2000. 

File  01-0042:  Ordinance  implementing  Amendment 
No.  3  to  the  FY  1997-2001  four  year  Memorandum 
of  Understanding  between  the  Glaziers, 
Architectural  Metal  and  Glass  Workers,  Local 
Union  718  and  the  City  and  County  of  San 
Francisco  reconfirming  the  Agency  Shop  provision 
thereof  effective  July  1,  2000. 

File  01-0043:  Ordinance  implementing  Amendment 
No.  4  to  the  FY  1997-2001  four  year  Memorandum 
of  Understanding  between  the  Laborers 
International  Union,  Local  261  and  the  City  and 


Memo  to  Finance  and  Labor  Committee 

January  24,  2001  Finance  and  Labor  Committee  Meeting 

County  of  San  Francisco  reconfirming  the  Agency 
Shop  provision  thereof  effective  July  1,  2000. 

File  01-0044:  Ordinance  implementing  Amendment 
No.  3  to  the  FY  1997-2001  four  year  Memorandum 
of  Understanding  between  the  Machinist  Union, 
Local  1414,  International  Association  of  Machinists 
and  Aerospace  Workers  Machinists  Automotive 
Trades  District  Lodge  190  and  the  City  and  County 
of  San  Francisco  reconfirming  the  Agency  Shop 
provision  thereof  effective  July  1,  2000. 

File  01-0045:  Ordinance  implementing  Amendment 
No.  2  to  the  FY  1997-2001  four  year  Memorandum 
of  Understanding  between  the  Pile  Drivers,  Divers, 
Carpenters,  Bridge  Wharf  and  Dock  Builders,  Local 
Union  No.  34  and  the  City  and  County  of  San 
Francisco  reconfirming  the  Agency  Shop  provision 
thereof  effective  July  1,  2000. 

File  01-0046:  Ordinance  implementing  Amendment 
No.  1  to  the  FY  1997-2001  four  year  Memorandum 
of  Understanding  between  the  United  Association 
of  Journeymen  and  Apprentices  of  the  Plumbing 
and  Pipe  Fitting  Industry,  Local  No.  38  and  the 
City  and  County  of  San  Francisco  reconfirming  the 
Agency  Shop  provision  thereof  effective  July  1, 
2000. 

Description:  The       proposed       ordinances       would       amend 

(Amendments  1,  2,  3  or  4  depending  on  the  union, 
see  above)  six  existing  FY  1997-98  through  FY 
2000-01  four-year  Memoranda  of  Understanding 
(MOUs),  retroactive  for  the  one  year  period  from 
July  1,  2000  through  June  30,  2001  to  reaffirm  the 
Agency  Shop  provisions,  that  are  currently 
included  in  the  existing  MOUs,  with  the  following 
six  unions: 

1.  International       Brotherhood       of       Electrical 
Workers,  Local  6; 

2.  Glaziers,      Architectural     Metal      and      Glass 
Workers,  Local  718; 

3.  Laborers  International  Union,  Local  261; 

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BUDGET  ANALYST 

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Memo  to  Finance  and  Labor  Committee 

January  24,  2001  Finance  and  Labor  Committee  Meeting 

4.  Machinist  Union,  Local  1414,  which  includes 
the  International  Association  of  Machinists  and 
Aerospace  Workers  Machinists  Automotive 
Trades  District  Lodge  190 

5.  Pile  Drivers,  Divers,  Carpenters,  Bridge,  Wharf 
and  Dock  Builders,  Local  34;  and 

6.  United  Association  of  Journeymen  and 
Apprentices  of  the  Plumbing  and  Pipe  Fitting 
Industry,  Local  38. 

In  accordance  with  the  State  Meyers-Millias-Brown 
Act,  California  Government  Code  Sections  3500- 
3510,  an  Agency  Shop  means  an  arrangement  that 
requires  an  employee,  as  a  condition  of  continued 
employment,  either  to  join  the  recognized  employee 
organization  (union),  or  to  pay  the  employee 
organization  a  service  fee  in  an  amount  not  to 
exceed  the  employee  organization's  standard 
initiation  fee,  periodic  dues,  and  general 
assessments  of  such  employee  organization  for  the 
duration  of  the  bargaining  agreement  (or 
Memorandum  of  Understanding),  or  a  period  of 
three  years  from  the  effective  date  of  such 
agreement,  whichever  period  is  less. 

According  to  Ms.  Alice  Villagomez  of  the 
Department  of  Human  Resources  (DHR),  although 
union  membership  in  an  employee  organization 
having  MOUs  with  the  City  and  County  of  San 
Francisco  is  voluntary,  if  an  employee  chooses  not 
to  join  a  union,  and  that  union  has  included  an 
agency  shop  provision  in  their  MOU,  then  that 
employee  can  be  charged  the  agency  shop  fees  by 
the  employee  organization  that  represents  that 
employee's  classification.  The  proposed  six 
ordinances  address  the  agency  shop  provisions  for 
those  City  employees  that  are  represented  but  do 
not  voluntarily  join  one  of  the  subject  six  unions. 
Ms.  Villagomez  advises  that  the  agency  shop  fees 
are  typically  less  than  the  total  union  membership 
fees  charged  to  employees  that  choose  to  join  the 
union  because  the  agency  shop  fees  can  only 
include  the  costs  for  representation  and  cannot 
include  the  union's  expenses  for  other  non- 
representation      activities,      such      as      political 

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Memo  to  Finance  and  Labor  Committee 

January  24,  2001  Finance  and  Labor  Committee  Meeting 

activities.  Ms.  Mary  Hao  advises  that  most,  but  not 
all  of  the  City's  MOUs  contain  agency  shop  fee 
provisions,  and  that  State  law  prohibits 
supervisory,  confidential  or  managerial  employees 
from  being  subject  to  agency  shop  provisions. 

The  Attachment,  provided  by  DHR,  identifies  (1) 
the  number  of  employees  that  would  be  affected  by 
the  subject  ordinances  and  (2)  the  amounts  such 
employees  pay  on  a  biweekly  basis  to  join  each  of 
the  subject  unions  and  (3)  the  amounts  such 
employees  pay  on  a  biweekly  basis  if  they  do  not 
join  each  union  and  instead  are  assessed  the 
agency  shop  fees  for  each  of  the  six  MOUs.  As 
shown  on  the  Attachment,  individual  employees 
are  charged  agency  shop  fees,  ranging  from  $15  to 
$35.78  per  biweekly  pay  period,  or  a  total  of 
approximately  $390  to  $930  per  year. 

The  Attachment  contains  variations  in  the  amount 
of  fees  paid  by  employees  in  three  of  the  subject 
unions  (i.e.,  Plumbers  Local  38,  Laborers  Local  261 
and  Electricians  Local  6)  because  of  internal 
variations  in  each  of  the  union's  formulas  for 
assessing  dues  and  agency  shop  fees.  DHR  advises 
that  the  number  of  employees  indicated  on  the 
Attachment  for  each  union  do  not  include  the 
supervisory,  confidential  or  management 
employees  within  each  union,  because,  as  noted 
above,  supervisory,  confidential  and  management 
employees  are  not  required  to  join  an  employee 
organization  and  the  agency  shop  provisions  are 
not  enforceable  for  such  positions. 

Comments:  1.  According  to  Ms.  Villagomez,   the   six   subject 

MOUs  currently  contain  identical  language  to  the 
language  that  is  now  being  proposed  regarding  the 
Agency  Shop  provisions.  These  new  amendments 
are  being  proposed  because,  as  noted  above,  in 
accordance  with  the  Meyers-Mil  1  i as-Brown  Act, 
State  Government  Code  Sections  3500-3510,  the 
Agency  Shop  provisions  can  only  be  in  effect  for  a 
maximum  of  three  years.  The  existing  six  MOUs 
extend  for  a  four-year  period,  from  July  1,  1997 
through  June  30,  2001.  Therefore,  after  the  third 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

4 


Memo  to  Finance  and  Labor  Committee 

January  24,  2001  Finance  and  Labor  Committee  Meeting 


year  of  the  existing  MOUs,  which  ended  on  June 
30,  2000,  these  Agency  Shop  provisions  were  no 
longer  in  effect. 

All  of  the  subject  ordinances  would  therefore 
amend  the  existing  six  MOUs,  and  reaffirm  the 
same  Agency  Shop  provisions  as  existed  between 
FY  1997-98  through  FY  1999-2000  to  now  become 
effective  for  FY  2000-01.  All  of  the  proposed 
amendments,  for  the  existing  six  unions  would  be 
effective  for  the  one  year  period,  retroactive  from 
July  1,  2000  through  June  30,  2001,  to  meet  the 
State's  three-year  limitation  requirement. 

2.  According  to  Ms.  Hao,  these  amendments  are 
only  now  being  brought  before  the  Board  of 
Supervisors  for  approval,  almost  seven  months 
after  their  effective  date  of  July  1,  2000,  because 
the  City  Attorney's  Office  recently  made  DHR 
aware  of  the  State's  three-year  limitation  on  the 
Agency  Shop  provisions. 

3.  Ms.  Hao  advises  that  the  State's  three-year 
limitation  for  Agency  Shop  provisions  in  the 
Meyers-Millias-Brown  Act,  was  recently  amended 
by  the  State  Legislature,  such  that  effective 
January  1,  2001,  there  are  no  limitations  on  the 
length  of  time  such  Agency  Shop  provisions  are 
effective  in  multi-year  MOUs. 

4.  Given  that  the  proposed  amendments  would 
simply  reaffirm  existing  Agency  Shop  provisions, 
the  proposed  ordinances  would  not  have  any  fiscal 
impact  on  the  City.  However,  as  shown  on  the 
Attachment,  individual  employees  would  be 
charged  agency  shop  fees,  ranging  from  $15  to 
$35.78  per  biweekly  pay  period,  or  a  total  of 
approximately  $390  to  $930  per  year. 

These  Agency  Shop  fees  are  deducted  by  the 
Controller's  Office,  from  the  individual  employees 
paychecks  on  a  biweekly  basis.  Ms.  Pamela  Levin 
of  the  Controller's  Office  confirms  that  the  proposed 
ordinances  would  not  result  in  any  incremental 
costs  to  the  City.  Ms.  Levin  also  advises  that  the 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

5 


Memo  to  Finance  and  Labor  Committee 

January  24,  2001  Finance  and  Labor  Committee  Meeting 

Controller's  Office  charges  a  payroll  deduction  fee 
which  is  deducted  from  the  Agency  Shop  fees 
transmitted  to  the  employee  organization  to  offset 
the  Controller's  cost  of  processing  such  deductions. 

5.  In  accordance  with  the  Agency  Shop  provisions, 
the  City  is  required  to  provide  each  newly  hired 
employee  with  information  regarding  each  union 
and  the  agency  shop  provisions  specified  in  their 
MOU.  In  addition,  the  Controller  is  required  to 
provide  (1)  a  list  to  the  union  of  all  employees  that 
are  members  of  the  union  and  (2)  a  list  to  the  union 
of  all  employees  that  pay  the  agency  shop  fees, 
identifying  the  employee's  name,  employee 
classification  number,  department  number  and  the 
amount  deducted. 

6.  In  accordance  with  the  Agency  Shop  provisions, 
the  union  is  required  to  annually  provide  an 
explanation  of  the  union's  agency  shop  fees  and 
sufficient  financial  information  to  employees  to 
enable  the  employees  who  must  pay  service  fees  to 
gauge  the  appropriateness  of  the  fees.  In  addition, 
the  union  must  provide  a  reasonably  prompt 
opportunity  to  the  employees  who  they  represent 
to  challenge  the  amount  of  the  agency  shop  fees 
before  an  impartial  decision  maker  chosen  by  a 
nationally  recognized  arbitration  agency,  and  the 
union  is  required  to  establish  an  escrow  account  to 
hold  amounts  reasonably  in  dispute  while  such 
challenges  are  pending.  Each  union  also  agrees  to 
indemnify  and  hold  the  City  harmless  for  any 
losses  or  damages  arising  from  these  provisions. 

7.  As  indicated  above,  most,  but  not  all  of  the  City's 
MOUs  contain  agency  shop  fee  provisions.  Further, 
State  law  prohibits  supervisory,  confidential  or 
managerial  employees  from  being  subject  to  agency 
shop  fee  provisions.  Therefore,  the  Budget  Analyst 
considers  approval  of  the  subject  ordinances,  which 
do  not  affect  all  City  employees,  to  be  policy 
matters  for  the  Board  of  Supervisors. 

Recommendation:  Approval   of  the   proposed   ordinances   are   policy 

matters  for  the  Board  of  Supervisors. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

6 


Attachment 


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Memo  to  Finance  and  Labor  Committee 

January  24,  2001  Finance  and  Labor  Committee  Meeting 


Item  7  -  File  01-0021 

Department: 

Item: 


Description: 


Public  Library 

Hearing  to  determine  and  ensure  that  the  voters'  intent 
in  approving  the  November  2000  Proposition  A,  Branch 
Library  Facilities  Improvement  Bond  Program  is  honored 
by  the  San  Francisco  Public  Library  and  the  San 
Francisco  Library  Commission;  and  to  receive  information 
from  the  San  Francisco  Public  Library  about  where  they 
intend  to  get  the  funds  to  implement  both  the  first  and 
second  phases  of  improvements  to  the  Main  Library. 

The  Proposition  A,  Branch  Library  Facilities 
Improvement  Bond,  approved  by  the  San  Francisco  voters 
in  November  of  2000,  authorized  $105,865,000  in  General 
Obligation  Bond  monies  for  the  acquisition, 
rehabilitation,  renovation,  improvement,  construction  and 
reconstruction  of  certain  improvements  and  renovations 
to  24  Branch  Libraries  and  to  the  Public  Library's 
System-Wide  Support  Center/Brooks  Hall  (see 
Attachment  I,  provided  by  the  Public  Library  for  a  list  of 
the  24  Branch  Libraries  and  the  System-Wide  Support 
Center/Brooks  Hall),  according  to  Mr.  George  Nichols 
from  the  Library. 

On  June  19,  2000,  the  Board  of  Supervisors  approved  a 
resolution  to  submit  to  the  San  Francisco  voters  on 
November  7,  2000,  a  proposition  to  incur  bonded 
indebtedness  of  the  City  and  County,  in  the  principal 
amount  of  $129,425,000  for  the  acquisition,  construction 
and  reconstruction  of  certain  improvements  to  Public 
Library  Branch  Facilities  (File  00-1058).  On  June  29, 
2000,  a  second  resolution  was  submitted  to  the  Board  of 
Supervisors  as  a  substitute  for  the  resolution  approved  by 
the  Board  of  Supervisors  on  June  19,  2000.  However,  the 
amount  of  the  Library's  proposed  bonded  indebtedness 
was  reduced  to  $105,865,000,  a  reduction  of  $23,560,000 
(File  00-1147)  in  this  second  resolution.  According  to  Mr. 
Nichols,  the  reduction  in  the  Branch  Library  Facilities 
Improvement  Bond  amount  was  due  to  recommendations 
by  the  City's  Capital  Improvement  Advisory  Committee 
(CIAC)  for  (a)  the  elimination  of  site  acquisition  costs  for 
the  proposed  new  Branch  Library  located  in  Mission  Bay, 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

8 


Memo  to  Finance  and  Labor  Committee 

January  24,  2001  Finance  and  Labor  Committee  Meeting 


(b)  a  reduction  in  costs  for  the  proposed  System-Wide 
Support  Center/Brooks  Hall  renovation,  (c)  the 
availability  of  State  Proposition  141  funding,  and  (d)  the 
availability  of  $2,400,000  from  the  Earthquake  Safety 
Program  II  fund.  Mr.  Nichols  advises  that  the  Mission 
Bay  Branch  Library  site  acquisition  costs  were  eliminated 
because  the  Public  Library  is  working  with  the 
Redevelopment  Agency  to  house  the  Mission  Bay  Branch 
Library  with  a  neighborhood  Senior  Citizen  Center  to  be 
located  in  Mission  Bay.  Mr.  Nichols  states  that  the 
System-Wide  Support  Center/Brooks  Hall  renovation 
costs  were  reduced  because  alternatives  to  the  renovation 
of  Brooks  Hall  and  the  construction  of  a  new  System-Wide 
Support  Center  as  separate  projects  were  reviewed,  and 
found  to  be  more  cost  effective  by  the  CIAC. 

Mr.  Nichols  advises  that  even  though  the  bond  amount 
was  reduced,  the  bond  resolution  language  remained  the 
same.  Such  language  specifically  prohibited  the  Public 
Library  from  using  any  of  the  Proposition  A,  Branch 
Library  Facilities  Improvement  Bond  monies  on 
improvements  to  the  Main  Library.  On  November  7, 
2000,  74.38  percent  of  San  Francisco  voters  approved 
Proposition  A,  the  Branch  Library  Improvement  Bond  for 
$105,865,000. 

Although  the  subject  hearing  references  phase  one  and 
two  of  improvements  to  the  Main  Library,  Mr.  Nichols 
states  that  there  are  no  stipulated  phases  for  the 
improvements  to  the  Main  Library. 

According  to  Mr.  Nichols,  an  independent  Post  Occupancy 
Evaluation  (POE)  Final  Report  on  the  Main  Library 
prepared  by  a  consultant  team  consisting  of  an  architect 
and  two  library  consultants,  was  issued  in  January  of 
2000,  outlining  suggestions  for  improvements  to  the  Main 
Library  facilities  totaling  approximately  $28,000,000  as 
detailed  in  the  San  Francisco  Public  Library  POE.  Such 
funds  would  be  subject  to  appropriation  approval  of  the 
Mayor  and  the  Board  of  Supervisors.  Since  the  issuance 
of  the  Final  POE,  the  Library  has  been  examining  the 


1  Proposition  14,  approved  by  the  voters  in  March  of  2000,  provides  $350  million  of  State-wide  funds  for  library 
construction  projects,  which  is  available  on  a  competitive  basis,  and  requires  a  35  percent  local  match. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

9 


Memo  to  Finance  and  Labor  Committee 

January  24,  2001  Finance  and  Labor  Committee  Meeting 


POE  recommendations  to  determine  what 
recommendations  are  necessary  to  improve  the  building 
and,  therefore,  the  efficiency  of  the  Main  Library.  At  the 
January  2,  2001  Library  Commission  Meeting,  the 
Library  presented  the  Commission  with  the  Library 
staffs  prioritized  list  of  desired  improvements  for  the 
Main  Library  which  totaled  approximately  $5,272,500 
(see  Attachment  II  provided  by  the  Public  Library).  Mr. 
Nichols  advises  that  the  Library  Commission  did  not 
approve  moving  ahead  with  any  projects  on  the  list  at 
that  time.  Mr.  Nichols  further  advises  that  any  projects 
for  the  Main  Library  approved  by  the  Library  Commission 
would  also  have  to  be  approved  by  the  Mayor  and  the 
Board  of  Supervisors  and  would  be  funded  by  fund 
balances  remaining  in  the  original  1988  $109,527,000 
Library  Improvement  Bond,  which  currently  total 
approximately  $4,300,000.2  In  addition,  Mr.  Nichols 
advises  that  approval  by  the  Mayor  and  the  Board  of 
Supervisors  would  be  required  to  use  unappropriated 
fund  balances  from  the  Proposition  E,  Library 
Preservation  Fund  to  fund  Main  Library  improvements. 
The  Library  is  projecting  a  Library  Preservation  Fund 
fund  balance  of  approximately  $2,500,000  to  $3,000,000  at 
the  end  of  the  FY  2000-2001.  According  to  Mr.  Nichols 
the  Library  would  not  use  the  November  2000  Proposition 
A,  Branch  Library  Facilities  Improvement  Bond  monies 
for  any  capital  improvements  to  the  Main  Library.  The 
balance  in  the  1988  Library  Improvement  Bond 
($4,300,000)  and  the  estimate  balance  in  the  Library 
Preservation  Fund  ($2,500,000  to  $3,000,000)  would  be 
more  than  enough  to  fund  the  Public  Library 
improvements  of  $5,272,500  for  the  improvements  to  the 
Main  Library  and  are  subject  to  appropriation  approval  of 
the  Mayor  and  the  Board  of  Supervisors. 

Mr.  Nichols  further  advises  that  at  its  January  18,  2001 
meeting,  the  Library  Commission  will  consider  approval 
of  a  $1,549,886  supplemental  appropriation  for  renovation 
and  repairs  to  the  Main  Library  in  FY  2000-2001.  The 
Attachment  III,  provided  by  the  Public  Library,  highlights 


2  Mr.  Nichols  advises  that  of  the  original  $109.5  million  1988  Library  Improvement  Bond,  S102.5  million  was 
expended  on  the  Main  Library,  and  $4,831,284  was  expended  on  the  Branch  Libraries,  including  $359,641  for  the 
Mission  Branch,  $1,826,506  for  the  Chinatown  Branch,  $1,005,066  for  the  Sunset  Branch,  $999,071  for  the  Park 
Branch  and  $641,000  for  the  Presidio  Branch. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

10 


Memo  to  Finance  and  Labor  Committee 

January  24,  2001  Finance  and  Labor  Committee  Meeting 

the  proposed  projects  totaling  an  estimated  $1,549,886. 
Mr.  Nichols  advises  that  based  on  the  Controller's 
anticipated  six-month  revenue  projections3,  the  Library 
proposes  to  spend  $250,000  from  unappropriated 
Proposition  E  Library  Preservation  Funds,  $586,000  from 
unappropriated  General  Fund  revenue  mandated  by 
Proposition  E  for  Library  use  and  $713,886  from  the  1988 
Library  Improvement  Bond  for  a  total  of  $1,549,886  to 
support  the  proposed  projects  highlighted  in  Attachment 
III  for  the  Main  Library.  Although,  the  proposed 
$1,549,886  of  projects  were  recommended  by  the  POE, 
these  projects  are  not  part  of  the  approximately 
$5,272,500  package  the  Public  Library  staff  discussed 
with  the  Library  Commission  on  January  2,  2001,  except 
for  a  $50,000  request  for  a  signage  consultant.  Mr. 
Nichols  advises  that  the  proposed  projects  totaling 
$1,549,886,  are,  for  the  most  part,  projects  recommended 
in  the  POE  that  can  be  completed  independent  of  other 
modifications  to  the  Main  Library  that  will  be  more 
complicated  to  execute. 

According  to  Mr.  Nichols,  the  Public  Library  is  currently 
planning  the  implementation  of  the  Proposition  A,  Branch 
Library  Facilities  Improvement  Bond  Program,  which 
may  include  the  creation  of  a  2000  Proposition  A,  Branch 
Library  Facilities  Improvement  Bond  Oversight 
Committee.  Members  may  include  individuals  from  the 
Library  Commission,  the  Council  of  Neighborhood 
Libraries,  the  Friends  and  Foundation  of  the  San 
Francisco  Public  Library,  the  Board  of  Supervisors,  the 
Mayor's  Office  and  interested  community  members.  One 
aspect  of  the  Proposition  A,  Branch  Library  Facilities 
Improvement  Bond  Oversight  Committee's  role  could  be 
to  ensure  that  the  Proposition  A,  Branch  Library 
Facilities  Improvement  Bond  monies  totaling 
$105,865,000  are  spent  as  specified  in  the  legislation  the 
voters  approved  on  November  7,  2000,  according  to  Mr. 
Nichols. 

Recommendation:  Request    the     Public     Library     to     instruct     its     2000 

Proposition  A,   Branch  Library  Facilities   Improvement 


3  As  of  the  writing  of  this  report,  according  to  Mr.  Joe  Matranga  of  the  Controller's  Office,  the  preliminary  six- 
month  projections  appear  to  be  accurate. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  and  Labor  Committee 

January  24,  2001  Finance  and  Labor  Committee  Meeting 


Supervisor  Yee 
President  Ammiano 
Supervisor  Leno 
Supervisor  Peskin 
Supervisor  Gonzalez 
Clerk  of  the  Board 
Controller 
Steve  Kawa 


Bond  Oversight  Committee  to  issue  reports  to  the  Finance 
and  Labor  Committee  on  a  semi-annual  basis  which  detail 
all  expenditures  from  the  bond  funds  by  facility  and  by 
individual  projects. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

12 


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fvccacnment    11 


San  Francisco  Public  Library 

Memorandum  lOO  Larkin  Street,  San  Francisco,  CA  94102 

To:       Library  Commissioners 
From:  Susan  Hildreth,  Acting  City  Librarian  J  ft 
Re:       Post  Occupancy  Evaluation  Recommendations 
Date:    January  2,  2001 

At  the  suggestion  of  President  Higueras,  staff  has  prepared  for  your  review  a  detailed 
analysis  of  the  recommendations  that  were  included  in  the  Post  Occupancy  Evaluation  of 
the  Main  Library.  We  have  addressed  the  nineteen  major  recommendations  included  in 
the  report,  including  staff  response,  timeline  and  estimated  costs  for  each 
recommendation.  The  report  also  contained  specific  recommendations  regarding  audio- 
visual systems  which  we  are  addressing  but  have  not  included  in  this  document. 

In  an  attempt  to  summarize  information  contained  in  the  report,  I  would  like  to  highlight 
the  following  priorities  identified  by  staff. 

Projects  with  most  benefit  to  public  and  staff  Total  Cost  -  $5,272,500 

1 .  Development  of  new  master  signage  system  to  be  completed  by  Fall  2001 . 
Estimated  cost  -  $350,000 

2.  Improvements  to  First  Floor,  Borrowers'  Services  area  —  A  staff  task  force  led  by 
Ned  Himmel  is  developing  recommendations  for  this  area,  to  be  completed  by 
June  2001. 

Estimated  cost  -  $1,822,500 

3.  Expansion  of  First  Floor  for  public  services  -  Dependant  on  relocation  of 
Technical  Services;  determination  of  new  location  to  be  made  by  Fall  2001. 
Estimated  cost  -$1,890,000.  Does  not  include  cost  of  relocation  of 
Technical  Services. 

4.  Improvements  to  First  Floor  restrooms  -  Dependant  on  relocation  of 
Technical  Services. 

Estimated  cost  -  $400,000 

5.  Improvements  to  Second  Floor  -  To  be  developed  by  January  2002. 
Estimated  cost  -  $810,000 

Modifications  to  the  Third  Floor,  including  reconfiguring  service  desks  and  increasing 
public  space,  will  also  be  reviewed  by  staff.  Estimated  costs  are  $2,600,000. 

Staff  recommends  that  the  Library  Improvement  Fund,  with  a  balance  of  about 
$4,000,000,  be  used  to  support  these  modifications  as  they  are  developed.  The  Library 
Improvement  Fund  contains  accrued  interest  and  funds  remaining  from  the  bond  for 
the  construction  of  the  Main  Library.  Staff  is  preparing  a  supplemental  budget  request 
including  recommended  building  fixes  that  are  not  included  in  the  above  information  that 
is  planned  for  consideration  on  the  1/18/01  agenda. 


14 


Attachment    I 
Page    1    ot    4 


GROUP  1  PROJECTS 


Project                                       Project  Description/Justification                           Est.  Cost 

1 .    Loading  Dock 

The  loading  dock  services  the  Main  Library  as  well  as 
Brooks  Hall.  The  existing  dock  and  lift  cannot  accommodate 
the  variety  of  delivery  vehicles  that  use  the  dock.  This 
results  in  potentially  hazardous  conditions  as  loads  must  be 
manually  off-loaded  from  trucks  and  lifted  onto  the  dock. 
This  project  involves  the  purchase  and  installation  of  a 
mechanical  lift  that  can  handle  the  various  delivery  vehicles. 

$34,500 

2.    Seismic  Joint 

The  seismic  joint  requires  modification,  redesign,  and/or 
repair  due  to  inadequate  sealing.  The  Library  experiences 
water  intrusion  around  the  entire  Main  Library  perimeter 
footprint  and  at  the  curtain  wall  pre -cast  joints  during 
inclement  weather  and  paving  wash  down  activities.  The 
project  involves  installation  of  new  flashing  to  redirect 
water,  or  installation  of  a  gutter  system  to  catch  water.  The 
Library  has  replaced  damaged  mildewing  gypsum  board 
several  times  because  of  water  intrusion,  and 
will  continue  to  do  so  until  a  permanent  fix  is  designed  and 
installed. 

109,750 

3.    Fire  Doors 

This  is  a  fire,  life,  safety  issue.  Fire  doors  located  near  the 
Grove  Street  entrance  and  in  the  gallery  on  the  lower  level 
are  manually  operated.  These  are  two  extremely  heavy  fire 
doors  that  have  been  taken  off-line  from  the  fire/life  safety 
system  because  they  currently  close  too  swiftly,  have 
damaged  interior  surfaces  and  could  injure  staff  and  patrons. 
This  funding  will  allow  the  doors  to  be  closed  by  motors 
rather  than  counterweights.  The  project  involves  purchase 
and  installation  of  motors  and  control  panels  to  operate  the 
fire  doors. 

40,480 

4.    Public  Address  System 

The  existing  public  address  (PA)  system  is  inadequate  and 
needs  upgrading.  It  does  not  cover  non-public  work  areas  on 
all  floors  including  the  lower  level  of  the  Main  and  Brooks 
Hall.  This  places  staff  working  in  those  areas  at  risk  in  the 
event  of  an  emergency.  The  project  involves  upgrading  the 
PA  system  and  extending  the  system  into  non-public  work 
areas  in  the  Main  and  in  Brooks  Hall. 

95,000 

5.    Audio-Visual  Systems 

The  POE  found  deficiencies  with  the  existing  AV  systems  in 
the  Koret  and  other  public  meeting  rooms.  The  use  of  the 
Koret  and  other  public  meeting  rooms  in  the  Library  has 
exceeded  initial  expectations  and  capacity  of  the  Library. 
These  rooms  have  become  a  significant  resource  for 
community  group  meetings,  City  Agency  meetings,  private 
events,  and  varied  public  programming.  The  existing  AV 
system  does  not  adequately  meet  the  diversity  of 
programming  that  now  occurs.  This  project  involves  the 
purchase  and  installation  of  AV  equipment  capable  of 
handling  the  diversity  of  programming  that  occurs  at  the 
Library.  Equipment  purchase  and  installation  will  be  done  in 
accordance  with  recommendations  of  an  A/V  design 

57,000 

15 


fage    2   ot    4 


consultant. 

6.    Elevators 

Elevator  #7  serves  the  lower  level,  1st  and  2nd  floors.  It's 
motor  often  overheats  during  heavy  use.  This  project  would 
fund  an  oil  cooler  to  prevent  this  problem  from  occurring.  It 
would  also  fund  refinishing  of  the  all  elevator  interiors  to  a 
brushed  finish  to  reduce  vandalism  and  the  cost  of  annual 
refinishing.  Existing  public  elevator  doors  and  cabs  are 
covered  with  a  mirror-like  metal  finish.  Although  attractive 
they  are  difficult  and  costly  to  maintain.  The  doors  and  cabs 
are  subject  to  damage  from  normal  use  as  well  as  from 
graffiti  scratched  or  etched  into  the  panels.  The  project 
involves  refinishing  the  door  and  cab  surfaces,  converting 
them  from  their  current  highly  reflective  and  mirror-like 
finish  to  a  burnished  scratch  resistant  surface. 

49,433 

7.    Hyde  Street  Door 

This  project  involves  reconfiguring  the  staff  entry  on  Hyde 
Street.  The  existing  door  is  set-back  from  the  sidewalk 
creating  a  small  alcove.  During  hours  the  Library  is  closed, 
the  alcove  is  used  as  a  urinal  by  people  on  the  streets.  This 
significantly  increases  maintenance  of  the  area  and  is  a  major 
health  concern  for  staff  entering  and  leaving  the  building 
through  this  door.  The  project  involves  purchase  and 
installation  of  a  rolling  gate  that  will  cover  the  alcove  during 
the  hours  the  Library  is  closed  and  setting  the  existing  doors 
back  to  accommodate  the  rolling  gate. 

17,180 

8.    Exterior  Granite  and 
Lighting  Repairs 

Various  granite  pavers  surrounding  the  building  are  broken 
and  need  to  be  replaced.  Bollard  lighting  fixtures  will 
provide  needed  evening  illumination  of  the  ramps  and 
walkways  on  the  Fulton  and  Larkin  sides  of  the  building. 

64,600 

9.    Misc.  Wall  Repairs 

Several  of  the  walls  and  columns  with  encaustic  finishes 
have  been  damaged  and  need  to  be  restored.  Patrons  using 
reader  chairs  near  the  north  and  west  windows  on  floors  3,  4 
and  5  are  constantly  damaging  the  sheet  rock  since  there  is 
not  much  extra  space  between  the  back  of  the  chair  and  the 
wall.  Project  involves  repair  of  sheet  rock  and  Installation  of 
chair  railings  to  prevent  future  damage. 

11,600 

10.  6th  Floor  Public 
Storage/Locker 
Replacement 

Existing  lockers  on  the  6th  floor  would  be  replaced  with  a 
recessed  display  case  that  would  include  a  tackable  back 
surface  and  adjustable  shelves.  The  lockers  are  virtually 
unused  and  the  display  case  would  enhance  exhibits  that  are 
staged  on  the  6th  floor.  The  project  involves  design, 
construction,  and  installation  of  the  display  case. 

6,042 

11.  Grove  Street  Entrance 
Display  Case 

This  project  involves  the  installation  of  display  cases  in  the 
Grove  Street  entryway.  Display  cases  will  replace  benches 
that  are  currently  there.  Grove  Street  is  a  major  entry  point 
into  the  building  and  the  display  cases  would  provide  a 
convenient  and  effective  source  of  information  regarding 
programs,  exhibits,  and  public  service  announcements. 

14,850 

SUBTOTAL 
CONSTRUCTION 

5500,435 

Design  Contingency 

10% 

50,044 

General  Conditions 

10% 

50,044 

Contractor's  Overhead  and 

15% 

90,078 

16 


Attachment    I J 
Page   3   of   A 


Profit 

TOTAL  EST. 
CONSTRUCTION  BED 

$690,601 

Construction  Contingency 

103,590 

TOTAL 
CONSTRUCTION 

$794,191 

Project  Management, 
design,  consultants, 
construction  documents, 
permits,  and  management 

35% 

277,967 

TOTAL  PROJECT 
COST 

$1,072,158 

GROUP  2  PROJECTS 


1 .    Replace  damaged  table 
tops 

Tabletops  in  the  public  areas  are  heavily  used  and  have  been 
damaged  through  normal  use  and  through  deliberate  acts  of 
vandalism.  Existing  tabletops  are  constructed  of  wood. 
Although  attractive  they  are  difficult  to  maintain  and 
unsightly  when  damaged.  This  project  involves  installing 
plastic  laminate  over  existing  wood  tops  for  60  tables. 
Laminate  surfaces  are  easier  to  maintain  and  easier  to  repair 
when  damaged.  Project  will  be  completed  by  the  Bureau  of 
Building  Repair  (BBR)/DP W. 

S30.000 

2.    Door  Stop  Fabrication 
and  Installation 

Many  of  the  doorstops  used  at  glass  doors  are  broken.  A 
new  type  of  doorstop  has  been  tested  by  DPW  and  the 
Library  that  has  proven  to  be  effective  in  stopping  these 
heavy  glass  doors  from  hitting  walls/furniture.  Project  will 
be  completed  with  the  assistance  of  the  Bureau  of  Building 
Repair/DP W.  All  glass  door  locations  will  be  equipped  with 
these  doorstops. 

6,825 

3.    Signage  Consultant 

A  major  finding  of  the  POE  was  the  inadequacy  of  signage 
in  the  Library.  The  report  found  that  inadequate  signage 
reduces  operational  efficiency  by  creating  an  over-reliance 
on  staff  by  the  public  for  basic  directions  and  poses  a  barrier 
to  the  public's  access  to  materials  and  services.  The  POE 
specifically  noted  that  signage  is  not  visible  in  the  line  of 
travel,  stack  signage  is  deficient,  and  that  directional  signs 
are  not  clear.  The  POE  recommended  that  a  signage 
consultant  with  a  background  in  way-finding  design  for 
public  facilities  like  the  library  be  hired  to  develop  a  signage 
system  that  will  mitigate  existing  problems  and  after  the 
initial  signs  are  done,  can  be  replicated  at  a  low-cost.  This 
project  provides  funds  to  develop  an  RFP  for  consulting 
services  and  funds  to  pay  for  the  consultant  once  selected. 

50,000 

4.    Audio/Visual  Systems 
Design 

Project  involves  hiring  an  A/V  consultant  to  assess  and 
design  an  appropriate  system. 

20,000 

5.    Radio  Repeater 
System 

This  is  a  fire,  life,  safety  issue.  There  are  numerous  "dead" 
areas  in  the  building  where  radio  signals  and  communication 
cannot  take  place.  Radio  signals  cannot  be  picked  up  in 
Brooks  Hall.  Because  of  these  "dead"  areas,  Library 

230,000 

17 


Attachment  III 
Page  4  of  4 


personnel,  private  contractors,  and  emergency  personnel 
working  in  these  areas  cannot  communicate  via  radio  and 
this  places  them  at  risk  in  emergency  situations.  The 
portable  radio  repeater  system  will  allow  for  radio 
transmission  in  all  areas  of  the  main  library  and  in  Brooks 
Hall.  Transmitting  devices  will  be  wired  and  installed  which 
will  provide  needed  radio  signaling  necessary  for  normal 
operations  and  for  emergencies.  The  Library  will  work  with 
DTIS  to  complete  this  project. 

TOTAL,  OTHER 
PROJECTS 

S336,825 

PROJECT  RESERVE 

$140,903 

TOTAL  COSTS 

$1,549,886 

SOURCES 

Library  Preservation  Fund  (Proposition  E) 

General  Fund  (Proposition  E  Mandated  Contribution) 

Library  Improvement  Fund 


$250,000 
$586,000 
$713,886 


18 


City  and  County  of  San  Francisco  City Ha" 

J  J  1  Dr.  Carlton  B. 

Meeting  Minutes  Goodiett  Place 

San  Francisco,  CA 

Finance  and  Labor  Committee  94102-4689 


t>Tfo^ 


Wednesday,  January  31,  2001  10:00  AM  City  Hall,  Room  263 

Regular  Meeting 


Members  Present:      Mark  Leno,  Aaron  Peskin,  Matt  Gonzalez. 


MEETING  CONVENED 

The  meeting  convened  at  10:04  a.m. 

002145        [S.  F.  International  Airport  Advertising  Program  Lease] 

Resolution  approving  San  Francisco  International  Airport  Advertising  Program  Lease  between  Transportation 

Media,  Inc.  (a  division  of  Eller  Media)  and  the  City  and  County  of  San  Francisco,  acting  by  and  through  its 

Airport  Commission.  (Airport  Commission) 

12/6/00,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee. 

1/17/01,  CONTINUED.  Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Cathy  Widener,  Governmental  Affairs 

Administrator,  Airport 

Continued  to  January  31,  2001. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst:  Cathy  Weidner,  Government  Affairs 
Administrator,  Airport:  Theodore  Lakey,  Deputy  City  Attorney;  Theresa  Rivor,  Concessions  Development 
Manager,  Airport. 

Amended  at  the  end  of  line  5  by  adding  "requiring  notice  to  the  Finance  Committee  of  any  proposed 
advertising  program  expansion.  "  Further  amended  by  adding  the  following:   "FURTHER  RESOLVED.  That 
the  Airport  Director  shall  communicate  with  the  Finance  Committee  before  implementing  any  proposal  to 
expand  the  advertising  program  approved  by  this  resolution. "  New  title. 
AMENDED. 

Resolution  approving  San  Francisco  International  Airport  Advertising  Program  Lease  between  Transportation 
Media,  Inc.  (a  division  of  Eller  Media)  and  the  City  and  County  of  San  Francisco,  acting  by  and  through  its 
Airport  Commission;  requiring  notice  to  the  Finance  Committee  of  any  proposed  advertising  program 
expansion.  (Airport  Commission) 

RECOMMENDED  AS  AMENDED  by  the  following  vote: 
Ayes:  3  -  Leno,  Peskin,  Gonzalez 


City  and  County  of  San  Francisco  I  Printed  at  StH  PH  on   SOW 


Finance  and  Labor  Committee  Meeting  Minutes  January  31,  2001 


002187        [Contract  between  the  Dept.  of  Public  Health  and  Health  Advocates,  LLP  to  provide  uncompensated 
care  recovery  services] 

Resolution  authorizing  the  Director  of  Public  Health  and  the  Purchaser  to  execute  a  contract  between  the  City 

and  County  of  San  Francisco  and  Health  Advocates,  LLP  to  provide  uncompensated  care  recovery  services. 

(Public  Health  Department) 

12/13/00,  RECEIVED  AND  ASSIGNED  lo  Public  Health  and  Environment  Committee 

12/28/00,  TRANSFERRED  to  Finance  and  Labor  Committee.  At  the  request  of  the  President,  this  matter  is  to  be  scheduled  for  the 

January  10,2001  meeting. 

1/17/01,  CONTINUED.  Heard  in  Committee.  Speakers:   Harvey  Rose.  Budget  Analyst,  Monique  Zmuda,  Chief  Financial  Officer, 

Department  of  Public  Health.  Steve  Reid,  President.  Paralign,  Diane  Sovereign  (attorney),  Linda  Safir.  Director  of  Sales,  Parahgn.  Karla 

Fine,  Manager,  Paralign;  Fanny  Mayorga,  Paralign;  Juan  Sosa,  Paralign.  Helen  Lim,  Paralign;  Robert  McCarthy  (registered  to  speak  for 

Paralign),  Al  Leibovic,  Health  Advocates,  Theodore  Lakey,  Deputy  City  Attorney,  Edward  Hamngton,  Controller. 

Continued  to  January  3 1 ,  200 1 . 

Heard  in  Committee.  Speakers:  Haney  Rose.  Budget  Analyst;  Monique  Zmuda,  Chief  Financial  Officer, 
Department  of  Public  Health. 
Continued  to  February  7.  2001. 
CONTINUED  by  the  following  vote: 
Ayes:  3  -  Leno,  Peskin,  Gonzalez 


010053         [Lease  of  property  at  1421  Broderick  Street  for  Department  of  Public  Health  to  operate  a  residential 
care  facility  for  persons  who  need  24-hour  care  and  supervision! 

Resolution  authorizing  and  approving  the  lease  by  and  between  the  City  and  County  of  San  Francisco,  for  the 
Department  of  Public  Health,  as  tenant,  and  Seto  Family  Trust,  as  landlord,  for  the  property  located  at  1421 
Broderick  Street.  (Real  Estate  Department) 
1/10/01,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee 

Heard  in  Committee.  Speakers:  Han'ey  Rose,  Budget  Analyst;  Marc  Trot:,  Department  of  Public  Health; 
Monique  Zmuda.  Chief  Financial  Officer.  Department  of  Public  Health;  Anthony  Delucchi.  Director  of 
Property,  Real  Estate  Department;  Richard  Robinson,  Community  Organizer.  Community  Outreach  Program. 
Amended  on  page  2,  line  5.  by  replacing  "SO. 67"  with  "SO. 81. " 
AMENDED. 

RECOMMENDED  AS  AMENDED  by  the  following  vote: 

Ayes:  3  -  Leno,  Peskin,  Gonzalez 


010104        [Settlement  of  Grievance.  Local  21  [ 

Resolution  authorizing  settlement  of  the  grievance  filed  by  Glen  Alston  and  the  International  Federation  of 

Professional  and  Technical  Engineers.  Local  21.  AFL-CIO  ("Local  21").  on  behalf  of  16  Civilian  Fire 

Inspectors  pursuant  to  the  Memoranda  of  LTnderstanding  between  Local  21  and  the  City  and  County  of  San 

Francisco  in  the  aggregate  amount  of  $80,080.48.  (Human  Resources  Department) 

1/17/01,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee. 

Heard  in  Committee.  Speakers:  Han'ey  Rose,  Budget  Analyst.  Alice  I'illagomez.  Deputy  Director.  Employee 

Relations  Division,  Department  of  Human  Resources;  Chief  Gary  Massetani.  Bureau  of  Fire  Inspection,  Fire 

Department;  Martin  Gran,  Deputy  City  Attorney;  Glenn  Alston. 

Amended  on  lines  8  and  13.  by  replacing  "$80,080.48"  with  "S81.625.52. "  New  title. 

AMENDED. 


City  and  County  of  San  Francisco  2  Printed  at  ?:I5  PM  on  J  3  M 


Finance  and  Labor  Committee  Meeting  Minutes  January  31,  2001 

Resolution  authorizing  settlement  of  the  grievance  filed  by  Glenn  Alston  and  the  International  Federation  of 
Professional  and  Technical  Engineers,  Local  21,  AFL-CIO  ("Local  21"),  on  behalf  of  16  Civilian  Fire 
Inspectors  pursuant  to  the  Memoranda  of  Understanding  between  Local  21  and  the  City  and  County  of  San 
Francisco  in  the  aggregate  amount  of  $81,625.52.  (Human  Resources  Department) 
RECOMMENDED  AS  AMENDED  by  the  following  vote: 
Ayes:  3  -  Leno,  Peskin,  Gonzalez 


ADJOURNMENT 


The  meeting  adjourned  at  11:33  a.m. 


City  and  County  of  San  Francisco  3  ''"""■ J  *  *'*  Mi  on   J  3  M 


[Budget  Analyst  Report] 

Susan  Horn 

Main  Library-Govt.  Doc.  Section 


3 

hi /a 


DOCUMENTS  DEPT. 

OF  SAN  FRANCISCO        ,*».  ,       ?nm 

SAN  FRANCISCO 
^BOARD  OF  SUPERVISORS  PUBLIC  LIBRARY 

BUDGET  ANALYST 

1390  Market  Street,  Suite  1025,  San  Francisco,  CA  94102  (415)  554-7642 

FAX  (415)  252-0461 

January  25,  2001 

TO:  <:  Finance  and  Labor  Committee 

FROM:        'Budget  Analyst 

SUBJECT:  January  31,  2001  Finance  and  Labor  Committee  Meeting 

Item  1  -  File  00-2145 


Note:  This  item  was  continued  by  the  Finance  Committee  at  its  meeting  of 

January  17,  2001. 


Department: 
Item: 


Lessor: 


Lessee: 


Airport 

Resolution  approving  a  new  Advertising  Program  Lease 
between  Transportation  Media,  Inc.  and  the  City  and 
County  of  San  Francisco,  acting  by  and  through  its 
Airport  Commission. 

City  and  County  of  San  Francisco,  acting  by  and  through 
its  Airport  Commission 

Transportation  Media,  Inc.,  a  division  of  Eller  Media 
Company,  Inc.,  an  Illinois-based  company. 


Locations  Being 
Leased: 


According  to  Mr.  Bob  Rhoades  of  the  Airport,  there  are 
144  locations  for  the  proposed  advertising,  divided  into 
two  categories: 

•     Wall-mounted    advertising    spaces    in    the    Airport's 
parking    structures,     transit    stations,     shuttle    bus 


Memo  to  Finance  and  Labor  Committee 

January  31,  2001  Finance  and  Labor  Committee  Meeting 


interiors,   non-terminal  bus   shelters,   the   rental  car 
center,  and  parking  area  connector  tunnels. 
•     Silent    monitors    in    the     International    Terminal's 
boarding  areas.    Silent  monitors  are  27  inch  high-tech 
screens. 

None  of  the  proposed  144  advertising  locations  would  be 
in  the  Airport's  North  Terminal,  South  Terminal,  or 
former  International  Terminal. 


Revenue  Generated: 


Term  of  Lease: 


Right  of  Renewal: 


Description: 


Under  this  proposed  lease,  Transportation  Media,  Inc.  is 
required  to  pay  the  Airport  a  first  year  Minimum  Annual 
Guarantee  of  $4,050,000  or  70  percent  of  gross  revenues, 
whichever  is  higher.  The  proposed  lease  states  that  the 
Minimum  Annual  Guarantee  shall  be  increased  annually 
by  the  amount  of  the  Consumer  Price  Index's  annual 
increase  (adjusted  for  any  decrease  in  the  annual  number 
of  enplanements).  If  further  advertising  sites  are  added 
to  the  lease,  then  the  Minimum  Annual  Guarantee  would 
be  increased  on  a  pro  rata  basis,  as  determined  by  the 
Airport. 

Five  years  from  the  earlier  of  (a)  the  date  on  which  any 
advertising  is  installed,  or  (b)  February  1,  2001. 

Three  one-year  options  exercisable  at  the  Airport 
Commission's  sole  option.  Mr.  Rhoades  states  that  there 
is  no  right  of  renewal  beyond  the  maximum  term  of  eight 
years  and  that  any  future  lease  would  be  subject  to  a 
Request  for  Proposal  (RFP). 

According  to  Mr.  Rhoades,  the  Advertising  Program  Lease 
represents  a  new  source  of  revenue  for  the  Airport.  Mr. 
Rhoades  advises  that  the  Airport  Commission  has  had  a 
policy  banning  advertising  inside  the  Airport's  terminals 
since  the  1980s.  This  policy  was  amended  in  early  2000 
when  the  Airport  Commission  decided  to  permit  (a) 
advertising  panels  in  certain  limited  areas  within  the 
Airport's  parking  structures,  transit  stations,  shuttle  bus 
interiors,  non-terminal  bus  shelters,  the  rental  car  center, 
and  parking  area  connector  tunnels,  and  (b)  silent 
monitors  in  the  International  Terminal's  boarding  areas. 
The  advertising  display  equipment  would  be  subject  to 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  and  Labor  Committee 

January  31,  2001  Finance  and  Labor  Committee  Meeting 

approval  by  tbe  Airport's  Design  and  Review  Committee1, 

while  other  Airport  staff  would  be  responsible  for 
reviewing  the  advertisements'  content.  The  proposed 
lease  prohibits  advertisements  which  violate  the  Airport 
Advertising  Standards  Policy,  including  those  which  (a) 
advertise  alcohol  or  tobacco  products,  (b)  espouse  political 
or  religious  views,  (c)  promote  any  illegal  activity, 
gambling,  or  services  in  direct  competition  with  the 
Airport's  business  objectives,  or  (d)  contain  offensive 
imagery  or  language.  Transportation  Media,  Inc.  would 
coordinate  all  of  the  advertisers. 

Comments:  The  Airport's  Proposed  Lease  with  Transportation 

Media.  Inc. 

1.  The  RFP  for  the  proposed  lease  was  issued  by  the 
Airport  in  July  of  2000  and  firms  were  required  to  submit 
proposals  with  a  Minimum  Annual  Guarantee  of 
$2,000,000  or  more.  According  to  Mr.  Patrick  Quinn  of 
the  Airport,  the  Airport  notified  approximately  25  firms  of 
an  informational  conference  which  was  held  on  June  28, 
2000.  Seven  of  the  firms  which  attended  were 
subsequently  sent  a  copy  of  the  Airport's  RFP.  The  seven 
firms  which  received  the  RFP  were  Airport  Consulting 
Incorporated,  Blazers  Airport  Advertising,  Cartelera 
Communications,  Eller  Media  (Transportation  Media, 
Inc.),  Foster  Media,  JC  Decaux  (Skysites  Airport 
Advertising),  and  Leigh  Fisher  Associates.  The  Airport's 
RFP  was  issued  at  the  same  time  as  a  consortium  of 
airlines  issued  a  similar  RFP  for  a  separate  advertising 
program  in  the  loading  bridges  (the  moveable  corridors, 
mostly  owned  by  the  airlines,  which  connect  the  terminals 
to  the  airplanes).  Mr.  Rhoades  states  that  on  October  23, 
2000  the  Airline  Consortium  chose  Transportation  Media, 
Inc.  out  of  the  three  proposals  which  were  submitted  to 
the  Airline  Consortium  (see  Comments  No.  4  -  9).  In 
response  to  the  Airport's  RFP,  on  October  27,  2000  the 
Airport  received  only  one  proposal  from  Transportation 
Media,  Inc.  which  had  already  been  awarded  the  Airline 
Consortium's  loading  bridge  advertising  program  license 
agreement.       Attachment    I,    provided   by    the    Airport, 


1  The  Airport's  Design  and  Review  Committee  consists  of  Mr.  Michael  Allen  (Project  Manager, 
Bureau  of  Design  and  Construction),  Mr.  Amir  Koleini  (Principal  Architect,  Facilities,  Operations 
and  Maintenance),  and  Mr.  Robin  Chiang  (Architect). 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  and  Labor  Committee 

January  31,  2001  Finance  and  Labor  Committee  Meeting 


explains  why  the  Airport  only  received  one  bid  in  response 
to  its  RFP. 

2.  The  responsiveness  of  Transportation  Media,  Inc.'s 
proposal  to  the  Airport  RFP's  minimum  standards  was 
evaluated  by  a  five-member  evaluation  team  comprising 
two  outside  consultants  who  are  experts  in  design  and 
advertising,  one  senior  airline  representative  involved  in 
advertising  and  promotions,  an  Airport  official 
responsible  for  exhibitions,  and  an  Airport  Finance 
official.  The  Transportation  Media,  Inc.  proposal  included 
a  Minimum  Annual  Guarantee  to  the  Airport  of 
$4,050,000  in  the  first  year  of  the  proposed  lease,  which  is 
$2,050,000  or  102.5  percent  more  than  the  Minimum 
Annual  Guarantee  of  $2,000,000  required  under  the 
Airport's  RFP. 

3.  The  Minimum  Annual  Guarantee  of  $4,050,000  in 
Year  1  represents  an  average  of  approximately  $28,125 
per  year  for  each  of  the  144  advertising  sites.  According 
to  Mr.  Rhoades,  the  actual  amount  charged  to  each 
advertiser  by  Transportation  Media,  Inc.  for  each  of  those 
144  advertising  spaces  will  be  determined  by  rate  cards 
which  are  set  according  to  market  values.  The  proposed 
lease  provides  for  Airport  verification  of  gross  advertising 
revenues  through  (a)  a  monthly  gross  receipts  report 
signed  by  the  Lessee,  (b)  an  unqualified  year-end  report 
certified  by  a  certified  public  accountant,  (c)  periodic 
audits  of  the  Lessee's  gross  receipts,  and  (d)  other  reports 
and  submissions  requested  at  the  discretion  of  the  Airport 
Director.  According  to  Mr.  Rhoades,  Transportation 
Media,  Inc.  is  already  booking  advertisers  to  use  the 
advertising  space  which  will  be  available  under  the 
proposed  lease. 

Licensing  Agreement  Between  the  Airline 
Consortium  and  Transportation  Media,  Inc. 

4.  At  the  direction  of  the  Finance  and  Labor  Committee, 
the  Budget  Analyst  has  analyzed  the  loading  bridge 
advertising  program  license  agreement  between  the 
Airline  Consortium  and  Transportation  Media,  Inc.  This 
license  agreement  covers  the  moveable  corridors  which 
connect  the  terminals  to  the  airplanes.     Most  of  these 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  and  Labor  Committee 

January  31,  2001  Finance  and  Labor  Committee  Meeting 


moveable  corridors  are  owned  by  tbe  airlines.  According 
to  Mr.  Rboades,  tbe  idea  of  a  loading  bridge  advertising 
program  was  initiated  by  a  consortium  of  airlines  wbicb 
own  60  domestic  terminal  loading  bridges:  American, 
Alaska,  Continental,  Delta,  Nortbwest,  United,  and  USA 
Airways.  Tbe  Airport  Commission  approved  tbis  concept, 
extending  tbe  program  to  include  the  17  loading  bridges 
the  Airport  owns  in  the  new  International  Terminal 
which  are  operated  by  the  San  Francisco  Terminal 
Equipment  Company,  LLC  (SFOTEC),  representing  25 
airlines  which  operate  international  flights  out  of  the 
Airport2.  In  total,  the  Airline  Consortium  comprises  29 
airlines3  and  the  loading  bridge  advertising  program 
covers  a  total  of  77  loading  bridges  (60  in  the  domestic 
terminals  and  17  in  the  new  International  Terminal).  Mr. 
Rhoades  states  that,  once  the  Airport  Commission 
authorized  the  loading  bridge  advertising  program,  the 
Airline  Consortium  ran  its  own  competitive  bid  process 
without  any  involvement  from  the  Airport.  The  Airline 
Consortium  required  Transportation  Media,  Inc.  to  pay 
the  Airline  Consortium  either  a  Minimum  Annual 
Guarantee  of  $75,000  per  loading  bridge,  for  a  total  of 
$5,775,000  per  year,  or  70  percent  of  gross  revenues, 
whichever  is  higher.  In  turn,  the  Airline  Consortium  is 
required  to  pay  the  Airport  either  (a)  $2,887,500  which  is 
one  half  of  the  Minimum  Annual  Guarantee  amount  of 
$5,775,000,  or  (b)  35  percent  of  gross  revenues,  whichever 
is  higher. 

5.   The  Airline  Consortium  received  proposals  from  three 
firms: 

(a)  Transportation  Media,  Inc.  which,  according  to  Mr. 
Quinn,  proposed  a  Minimum  Annual  Guarantee  of 
$75,000  per  loading  bridge,  or  $5,775,000  in  total. 


2  SFOTEC  members  are  Aeroflot,  Air  China,  Air  France,  Alaska  Airlines,  All  Nippon  Airways, 
Allegro,  Alitalia,  Asiana,  British  Airways,  Cathay  Pacific,  China  Airlines,  Eva  Airways,  Japan 
Airlines,  KLM  Royal  Dutch  Airlines,  Korean  Airlines,  Lufthansa,  Mexicana,  Northwest,  Philippine 
Airlines,  Ryan  International,  Singapore  Airlines,  Swiss  Air,  Taca  International,  United  Airlines,  and 
Virgin  Atlantic. 

3  The  29  airlines  include  22  SFOTEC  members  which  only  operate  international  flights  out  of  the 
Airport,  four  airlines  which  only  operate  domestic  flights  out  of  the  Airport  (American,  Continental, 
Delta,  and  USA  Airways),  and  three  airlines  which  operate  both  international  and  domestic  flights 
out  of  the  Airport  (Alaska,  United,  and  Northwest). 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  and  Labor  Committee 

January  31,  2001  Finance  and  Labor  Committee  Meeting 


(b)  Skysites  Airport  Advertising,  an  affiliate  of  JC 
Decaux,  wbich,  according  to  Mr.  Quinn,  proposed  a 
Minimum  Annual  Guarantee  of  $45,000  per  loading 
bridge.  Mr.  Quinn  noted  that  Skysites  Airport 
Advertising's  proposed  Minimum  Annual  Guarantee 
was  both  (1)  $30,000  per  loading  bridge  less  than  the 
Minimum  Annual  Guarantee  required  by  the  Airline 
Consortium,  and  (2)  based  on  an  unrealistically  high 
passenger  throughput  assumption  of  2,000 
passengers  per  loading  bridge  per  day  which  only 
United  Airlines'  loading  bridges  currently  meet. 

(c)  InPlaneView,  Inc.  which,  according  to  Mr.  Quinn, 
submitted  neither  a  Minimum  Annual  Guarantee 
nor  a  performance  bond. 

The  Airline  Consortium  chose  Transportation  Media,  Inc. 
which  was  the  only  proposer  to  meet  the  Airline 
Consortium's  Minimum  Annual  Guarantee  requirements. 
Attachment  II,  provided  by  the  Airport,  outlines  the 
history  and  financial  arrangements  of  the  loading  bridge 
advertising  program. 

6.  Mr.  Quinn  advises  that  each  member  of  the  Airline 
Consortium  will  sign  an  identical  licensing  agreement 
with  Transportation  Media,  Inc.  These  documents  cite 
the  Airport's  50  percent  required  payment  from  either  the 
Minimum  Annual  Guarantee  received  by  the  Airline 
Consortium  (which  is  $2,887,500  for  the  Airport),  or  the 
70  percent  of  gross  revenues  (which  is  35  percent  of  gross 
revenues  for  the  Airport),  whichever  is  higher.  Once 
these  licensing  agreements  have  been  signed,  Mr.  Quinn 
advises  that  the  Airport  will  require  each  member  of  the 
Airline  Consortium  to  sign  a  third  party  agreement  with 
the  Airport.  This  third  party  agreement  (a)  approves 
airline  installation  of  advertising  in  the  loading  bridges, 
(b)  establishes  the  Airport  as  a  third  party  beneficiary, 
and  (c)  provides  the  Airport  with  the  right  to  terminate 
the  loading  bridge  advertising  program  license  agreement 
between  the  Airline  Consortium  and  Transportation 
Media,  Inc.  upon  30  days  written  notice  from  the  Airport 
Director,  at  which  time  each  airline  would  be  required  to 
cease  all  advertising  on  its  loading  bridges  and  remove 
the  advertising  panels. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  and  Labor  Committee 

January  31,  2001  Finance  and  Labor  Committee  Meeting 


7.  At  the  Finance  and  Labor  Committee  meeting  of  July 
17,  2001,  the  Budget  Analyst  had  questioned  why  the 
loading  bridge  advertising  program  license  agreement 
between  the  Airline  Consortium  and  Transportation 
Media,  Inc.  (in  contrast  to  the  subject  proposed  lease 
between  the  Airport  and  Transportation  Media,  Inc.),  and 
the  resulting  revenues  of  at  least  $2,887,500  per  year  for 
the  Airport,  were  not  subject  to  Board  of  Supervisors 
approval.  Mr.  Rhoades  states  that  the  loading  bridge 
advertising  license  agreement  is  between  the  Airline 
Consortium  and  Transportation  Media,  Inc.  and  that  the 
Airport  is  not  a  party  to  that  license  agreement.  With 
regard  to  the  Airport's  ability  to  receive  revenues  from  the 
loading  bridge  advertising  program  without  first 
obtaining  Board  of  Supervisors  approval,  Ms.  Mara 
Rosales  and  Ms.  Adrienne  Go  of  the  City  Attorney's  Office 
state  that  the  Airport's  legal  authority  to  receive  such 
revenues  stems  from  the  Airport's  Lease  and  Use 
Agreements  with  the  airlines,  which  were  previously 
approved  by  the  Board  of  Supervisors  in  1981.  According 
to  Ms.  Rosales  and  Ms.  Go,  under  these  Lease  and  Use 
Agreements,  the  Airport  Director  has  the  authority  to 
consent  to  variations  to  the  prescribed  uses  of  the  Airport 
space  leased  by  the  airlines.  Therefore,  Ms.  Rosales  and 
Ms.  Go  state  that,  as  a  condition  to  granting  his  consent 
to  such  advertising,  the  Airport  Director  required  the 
Airline  Consortium  to  share  a  negotiated  percentage  of 
the  resulting  revenues  with  the  Airport.  In  requiring  a 
share  of  the  advertising  revenues  in  return  for  allowing 
the  Airline  Consortium  to  advertise  on  the  loading 
bridges,  the  Airport  Director  has  acted  within  the  scope  of 
the  Lease  and  Use  Agreements  previously  approved  by 
the  Board  of  Supervisors.  Therefore,  Ms.  Rosales  and  Ms. 
Go  state  that  the  loading  bridge  advertising  revenues  of 
at  least  $2,887,500  to  be  received  by  the  Airport  directly 
from  the  Airline  Consortium  do  not  require  separate 
Board  of  Supervisors  approval. 

8.  Mr.  Quinn  states  that  United  Airlines  gave 
Transportation  Media,  Inc.  notice  to  proceed  with 
installing  the  first  advertising  on  its  loading  bridges  from 
January  18,  2001.  The  Airport  will  receive  35  percent  of 
the  gross  revenues  from  this  advertising.  Such  revenue 
will     not     contribute     toward     the     Minimum     Annual 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  and  Labor  Committee 

January  31,  2001  Finance  and  Labor  Committee  Meeting 


Guarantee  because  the  hcensing  agreements  between 
each  airline  and  Transportation  Media,  Inc.  have  not  yet 
been  signed.  Payment  of  the  Minimum  Annual 
Guarantee  will  commence  once  those  hcensing 
agreements  have  been  signed,  according  to  Mr.  Quinn. 

Comparison  Between  the  Airport's  Proposed  Lease 
with  Transportation  Media,  Inc.  and  the  Airline 
Consortium's  License  Agreement  with 
Transportation  Media,  Inc. 

9.  On  the  basis  of  a  detailed  comparison  between  the 
license  agreement  between  the  Airline  Consortium  and 
Transportation  Media,  Inc.  and  the  subject  proposed  lease 
between  the  Airport  and  Transportation  Media,  Inc.,  the 
Budget  Analyst  concludes  that  the  economic  provisions 
contained  in  each  of  the  two  contracts  are  fundamentally 
comparable  and  result  in  reasonable  revenues  being  paid 
to  the  Airport.  Under  the  hcensing  agreement  between 
the  Airline  Consortium  and  Transportation  Media,  Inc. 
and  the  proposed  subject  lease  between  the  Airport  and 
Transportation  Media,  Inc.,  the  Airport  would  receive 
total  additional  revenues  of  at  least  $6,937,500  annually 
under  the  combined  Minimum  Annual  Guarantees.  As 
previously  noted,  the  Airport  Director  can  terminate  the 
license  agreement  between  the  Airline  Consortium  and 
Transportation  Media,  Inc.  upon  30  days  written  notice, 
at  which  time  each  airline  would  be  required  to  cease  all 
advertising  on  its  loading  bridges  and  remove  the 
advertising  panels. 


Recommendation:  Approve  the  proposed  resolution. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


c JAN.04'2001  15:55  650  794  4519 


CONCESSION  DEV  S  MGMT 


Attachment   I 


SFO 


San  Francisco  International  Airport 


MEMORANDUM 


P.O.Box  8097 
San  Francisco. CA  9412S 
Tei  6S0. 821.5000 
Fax  6S0. 321.5005 

www.flyjfo.com 


AIRPORT 
COMMISSION 

CUT  ANQ  COUNTY 
OtSAN  FRANCISCO 

wau<  L.  jrown,  jr. 


TO:  Alan  Gibson 

Budget  Analyst       * 

FROM:  Bob  Rhoades       v°^ 

Deputy  Airport  Director 
Business  Division 


SUBJECT:     Request  for  Proposal  Response 


DATE:    January  4,  2001 


HENRY  E.BERMAN 


LARRY  MAZZOLA 
Via  MtSIOIHT 

MICHAEL  S.  STRUNSKY 

LINDAS.  CRAYTON 


JOHN  I.MARTIN 

aiwort  oiacaon 


This  is  in  response  to  your  email  dated  January  3,  2001,  regarding  "further  information 
request".  This  memorandum  is  addressing  question  no.  2,  pertaining  to  Transportation 
Media,  Inc.,  being  the  sole  response  to  the  Airport  Advertising  Request  for  Proposal. 

On  June  28,  2000,  the  Airport  conducted  a  pre-proposal  conference  for  the  Airport 
Advertising  Program.  Through  Concession  Development  and  Management's  outreach, 
twenty- five  companies  were  identified  through  a  national  search  and  were  issued  the  pre- 
proposal  document. 

Seven  advertising  companies  responded  and  attended  the  pre-proposal  informational 
conference  (a  list  of  the  companies  have  been  emailed  to  you).  Transportation  Media, 
Inc.  was  the  only  company  to  respond  and  to  participate  in  the  proposal  process  of  the 
Airport  Advertising  Program. 

Separately,  Transportation  Media,  Inc.  and  JCDecaux/SkySites  participated  in  a  separate 
request  for  proposal  issued  and  awarded  (on  behalf  of  the  airlines)  the  loading  bridge 
advertising  program.  Transportation  Media,  Inc.,  being  the  successful  proposer,  was 
awarded  with  this  operating  agreement. 


cc:  Patrick  Quinn 

Concession  Development  and  Management 


J  '     '    "JAN. 04-2001  15:55  650  794  4519 


CONCESSION  DEV  I    HGMT 


.Attachment  ] 


San  Francisco  International  Airport 


MEMORANDUM 


P.O.  Box  8097 

5«n  Frand>co.CA  >«12fl 

Tel  650. 821.SOOO 

Fax  650.821.5005 

www.flyjfo.com 


airport 

{ommiiiiod 

city  aho  county 

or  :an  francisco 

HlhUI  L.  BROWN.  JR. 

HArOK 

HINRY  6-  1CRMAN 
'RC5IDCHT 

LARRY  MAZZOIA 
VICC  PRCSIDIHT 

MICHAtlS.  3TRUN5KY 

I.INOA  S.CRAYTON 


JOHN  L  MARTIN 
AlKPOKT  DlRtCTO* 


TO:  Alan  Gibson  DATE:  January  4, 200 1 

Budget  Analyst 

FROM:  Bob  Rhoades 

Deputy  Airport  Director 
Business  Division 

SUBJECT;     Loading  Bridges 

In  response  to  your  email  dated  January  3,  2001,  regarding  "further  information  request", 
this  memorandum  is  addressing  question  no.3,  pertaining  to  the  legal  authority  the 
airlines  control  the  loading  bridge  advertising  space  and  revenues. 

In  February  2000,  the  Airport  amended  its  long  standing  position  on  commercial 
advertising  in  certain  non-terminal  areas.  One  of  the  areas  the  airport  expanded  included 
the  airline-owned  loading  bridges  in  the  domestic  terminals.  In  order  to  allow  the  airlines 
to  commercially  advertise  in  their  loading  bridges,  the  airport  made  an  agreement  with 
the  airlines  that  all  revenues  would  be  split  in  half  between  the  Airport  and  the  airlines. 
In  return,  the  Airport  provided  the  airlines  the  same  opportunity  with  the  loading  bridges 
in  the  international  terminal,  which  the  Airport  owns. 

AvAirPros  conducted  a  Request  for  Proposal  (RFP)  for  the  loading  bridges  on  behalf  of 
the  airlines  to  facilitate  the  RFP  process.  The  contract  had  three  proposers: 
Transportation  Media,  Inc.,  A  Division  of  Eller  Media;  JCDecaux  -  SkySites;  and 
InPlaneView.  Transportation  Media,  Inc.  was  awarded  the  contract  based  on  their 
proposal. 


Memo  to  Finance  Committee 

January  31,  2001  Finance  Committee  Meeting 

Item  2  -  File  00-2187 

Note:     This  item  was  continued  by  the   Finance   and  Labor  Committee   at  its 
meeting  of  January  17,  2001. 


Department: 
Item: 


Contract  Term: 


Description: 


Department  of  Public  Health  (DPH) 

Resolution  authorizing  the  Director  of  Public  Health  and 
the  Purchaser  to  execute  a  contract  between  the  City  and 
County  of  San  Francisco  and  Health  Advocates,  LLP  to 
provide  uncompensated  care  recovery  services. 

March  1,  2001  through  December  31,  2002  (approximately 
22  months). 

Uncompensated  care  recovery  services  include  the 
assistance  to  complete  Supplemental  Security  Income 
(SSI)  and  Medi-Cal  eligibility  applications  on  behalf  of 
DPH  patients,  and  representation  and  legal  assistance  for 
patients  in  SSI  fair  hearings  and  appeals,  for  the  purpose 
of  collecting  unpaid  inpatient  hospital  bills  for  DPH 
services  that  are  provided  to  indigent  patients.  The 
proposed  resolution  would  authorize  DPH  to  enter  into  a 
contract  with  Health  Advocates,  LLP  (HA),  a  private 
contractor,  to  provide  an  uncompensated  care  recovery 
program. 

The  DPH  issued  a  Request  for  Proposals  (RFP)  in 
September  of  2000,  and  received  the  following  two  bids  in 
response  to  its  RFP:  (1)  Health  Advocates,  LLP  for 
$1,180,000  each  contract  year  and,  (2)  Paralign  for 
$1,090,000  each  contract  year.  Attachment  I,  provided  by 
Ms.  Monique  Zmuda  from  the  DPH,  indicates  that  the  bid 
amounts  were  based  on  estimated  annual  revenue  of 
$6,000,000,  which  has  since  been  reduced  to  $5,800,000. 
Ms.  Zmuda  further  advises  in  Attachment  I  that  HA 
reduced  its  bid  by  $90,000  to  $1,090,000  each  contract 
year,  the  same  amount  bid  by  Paralign,  after  negotiations 
with  the  DPH.  According  to  Ms.  Zmuda,  HA  was  selected 
based  on  the  DPH's  evaluation  of  the  established  criteria, 
which  awards  points  based  on  recent  relevant  experience, 
the  scope  of  work  to  be  performed,  the  quality  of  past 
projects  and  cost.  Ms.  Zmuda  states  that  the  DPH  also 
required  the  bidder  to  provide  these  services  by  multi- 
lingual and  multi-cultural  staff.  Ms.  Zmuda  further 
states  that  the  DPH  also  built  in  additional  services  into 
the  scope  of  work,  including  following  up  on  treatment 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

January  31,  2001  Finance  Committee  Meeting 


authorization  requests,  and  incurring  the  cost  of  re-billing 
for  services  provided,  once  the  clients  have  been  made 
eligible  for  Medi-Cal. 

According  to  Ms.  Zmuda,  the  DPH  has  contracted  out 
uncompensated  care  recovery  services  since  1988  to  help 
supplement  in-house  efforts  on  uncompensated  care 
recovery  services.  Ms.  Zmuda  advises  that  San  Francisco 
General  Hospital  (SFGH)  has  an  internal  staff  of  ten 
Hospital  Eligibility  Workers  to  assist  SFGH  patients  in 
identifying  financial  resources  to  pay  for  inpatient 
hospitalization  for  which  no  source  of  funding  is  currently 
available.  Eligibility  determination,  which  is  provided  by 
DPH  personnel,  and  authorized  by  the  City's  Department 
of  Human  Services,  typically  includes  assistance  in 
applying  for  Medi-Cal  or  SSI,  and  making  appropriate 
third-party  claims.  The  contractor  will  handle  those  cases 
which  the  internal  DPH  eligibility  workers  have  deemed 
"unreimburseable,"  usually  involving  former  inpatients 
who  have  been  discharged  form  SFGH.  These 
uncompensated  care  services  include  identifying  financial 
resources  to  pay  for  the  care  provided,  field  work  on 
behalf  of  indigent  patients,  such  as  visits  to  homeless 
shelters;  assistance  in  obtaining  further  medical 
treatments  or  evaluations,  as  necessary;  efforts  to  locate 
former  inpatients  whose  addresses  are  not  known,  and 
patient  advocacy  and  representation  in  appealing  denials 
of  benefits  to  administrative  agencies. 

Based  on  a  prior  year  actual  recovery  from  contracting 
this  service,  Ms.  Zmuda  advises  that  the  DPH  was  paid 
approximately  $5,800,000  a  year,  or  approximately 
$483,333  a  month  from  making  indigent  patients  eligible 
for  third-party  payment.  The  DPH  anticipates  the  same 
level  of  annual  reimbursement  to  be  made  under  the 
proposed  contract  period. 

The  proposed  subject  contract  would  only  pay  the 
contractor  a  percentage  of  the  revenues  actually  collected, 
on  behalf  of  the  City,  according  to  the  following  schedule: 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

January  31,  2001  Finance  Committee  Meeting 

Cumulative  Revenues  Generated  Contingency  Fees 

Each  Contract  Year  Paid  to  the  Contractor 

$0  to$  1,999,999  NET  20  percent 

$2  million      to$2,999,999  NET  18  percent 

$3  million      and  above      NET  16  percent 

"NET'  is  used  to  describe  the  actual  cash  received  by 
SFGH  as  opposed  to  any  unique  program  determinations 
of  allowable  amounts  and  the  deduction  of  contractual 
allowances.  In  accordance  with  the  contract  provisions, 
HA  would  be  paid  a  varying  fee  by  the  DPH  based  on  the 
percentage  of  the  revenues  collected  by  the  contractor. 

Comments:  1.      As   indicated   above,   the   proposed   contract   would 

extend  for  the  22-month  period  from  March  1,  2001 
through  December  31,  2002.  According  to  Ms.  Zmuda, 
DPH  expects  to  realize  approximately  $10,633,333  in 
additional  revenues  under  this  22-month  contract,  with 
the  contractor  to  be  paid  an  estimated  $1,884,667,  or  an 
overall  average  of  17.72  percent  of  the  revenue  collected, 
for  net  estimated  revenues  to  the  City  of  $8,748,667  for 
the  term  of  the  22-month  contract.  Attachment  II, 
provided  by  DPH,  highlights  the  estimated  revenue  and 
contingency  fees  associated  with  the  subject  contract 
agreement.  As  mentioned  above,  the  actual  contingency 
fees  paid  to  HA  will  depend  on  the  revenue  realized 
during  the  contract  period. 

2.  The  proposed  subject  resolution  authorizes  the 
Director  of  Public  Health  and  the  Purchaser  to  make 
amendments  to  the  subject  contract,  if  needed.  According 
to  Ms.  Zmuda,  this  is  a  standard  provision  in  all  of  the 
DPH's  contracts,  which  allows  the  DPH  to  make  minor 
changes,  such  as  including  an  additional  scope  of  work 
requirement  or  extending  a  contract  for  a  few  months 
while  an  RFP  is  in  process,  but  not  change  the  intent  of 
the  original  contract. 

3.  At  the  Finance  and  Labor  Committee  Meeting  of 
January  17,  2001,  the  Committee  requested  that  the  DPH 
provide,  (a)  additional  facts  pertaining  to  a  protest  made 
by  Paralign,  the  existing  contractor,  and  (b)  the  results  of 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

January  31,  2001  Finance  Committee  Meeting 

the  Human  Rights  Commission  evaluation  of  the  DPH 
Request  for  Proposal  Process  (RFP),  including  why  the 
contract  was  awarded  to  a  vendor  that  was  not  the  lowest 
bid.  Ms.  Zmuda  states  that  Paralign  appealed  the  DPH 
contract  award  to  Health  Advocates  and  claimed  that  the 
bid  evaluation  process  was  flawed.  Ms.  Zmuda  states  that 
Paralign's  claim  that  the  process  was  flawed  was  based  on 
the  participation  of  the  Program  Manager  in  the  bid 
evaluation  process.  Ms.  Zmuda  states  that  it  is  DPH 
policy  to  include  the  Program  Manager  in  the  evaluation 
of  bids  in  order  to  provide  technical  assistance  to  the 
evaluation  panel.  Ms.  Zmuda  advises  that  the  Paralign 
appeal  was  denied  based  on  the  finding  that  the  DPH 
followed  its  policy  and  that  there  was  no  irregularity  in 
the  process. 

According  to  Ms.  Zmuda,  the  Human  Rights  Commission 
has  not  yet  completed  its  written  report  for  the  Finance 
and  Labor  Committee  on  its  evaluation  of  the  DPH  RFP 
process.  Therefore,  Ms.  Zmuda  requests  that  this  item  be 
continued  for  one  week. 

Recommendation:  Continue    the    proposed    resolution    for    one    week    as 

requested  by  the  Department  of  Public  Health. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


DEC-20-2000   14:18   FROM  DPH-CFO 


City  and  County  of  San  Francisco 


Date: 
Memo  To: 

From: 

Re: 


TO    HARUEYROSE       Attachment   I 

Department  of  Public  Health 

Mitchell  H.  Katz,  M.D. 
Director  of  Health 


December  20, 2000 

Harvey  Rose 
Budget  Analyst 

Monique  Zmuda 
Chief  Financial  Officer 

Proposed  Contract  with  Health  Advocates,  LLP 


This  memo  is  in  response  to  questions  regarding  the  proposed  contract  with  Health 
Advocates  LLP,  to  provide  uncompensated  care  recovery  reimbursement  services  for  the 
Community  Health  Network  of  the  Department  of  Public  Health. 

The  following  summarizes  the  RFP  Process: 


Date  RFP  Issued: 
Selection  Made; 


September  29,  2000 
November  21,  2000 


Number  of  Bidders:     2-  Bom  profit-making  private  firms 

Bid  Amounts:  Both  firms  were  requested  to  bid  on  services  for  revenue  recovery  of  $6 
million  annually.  Although  the  bid  from  Health  Advocates  was  590,000  higher  than  the 
other  qualified  bidder,  Health  Advocates  had  a  higher  score,  and  thus  was  awarded  the 
contract  In  contract  negotiations  with  Health  Advocates,  the  Department  was  successful 
in  securing  a  reduction  equivalent  to  $90,000  in  the  contract  rate  for  the  services. 


(415)  554-2600 


101  Grove  Street 


Fllmvni  and  Paih 

San  Francisco,  CA  94102 


DEC-20-2000      i4:ia        FROM      DPH-CFO 


TO     HflRUEY  ROSE 


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Memo  to  Finance  Committee 

January  31,  2001  Finance  Committee  Meeting 

Item  3  -  File  01-0053 


Department: 


Item: 


Department  of  Public  Health  (DPH) 
Department  of  Administrative  Services  (DAS)  - 
Real  Estate  Division  (RED) 

Resolution  authorizing  and  approving  a  new  lease 
between  the  City  and  County  of  San  Francisco,  for  the 
Department  of  Public  Health,  as  Lessee,  and  Seto  Family 
Trust,  as  Lessor,  for  space  located  at  1421  Broderick 
Street. 


Location: 
Purpose  of  Lease: 

Lessor: 
Lessee: 


1421  Broderick  Street 

Residential  care  facility  for  approximately  34  individuals 
who  need  24-hour  care  and  supervision. 

Seto  Family  Trust 

The  City  and  County  of  San  Francisco  on  behalf  of  the 
DPH. 


No.  ofSq.  Ft.  and 
Cost  Per  Month: 


Annual  Cost: 


The  approximate  12,417  square  feet  of  rentable  square 
area  at  a  monthly  rental  rate  of  $10,000  per  month 
(approximately  $0.81  per  square  foot  per  month).  On  an 
annual  basis,  rent  would  total  $120,000  (approximately 
$9.66  per  square  foot  per  year)  during  Year  One  of  the 
subject  lease.  Under  the  subject  lease  agreement,  on  each 
anniversary  of  the  10  year  lease,  the  rental  rate  would 
increase  by  the  percentage  increase  in  the  Consumer 
Price  Index  (CPI)  for  the  San  Francisco  Metropolitan 
Area,  provided  that  the  percentage  increase  shall  not  be 
less  2  percent  or  more  than  6  percent. 

$120,000  in  Year  One  of  the  subject  lease  agreement. 
Annual  rental  costs  in  subsequent  years  would  be  subject 
to  the  annual  rent  adjustment  formula  as  explained 
above. 


Utilities  and 
Janitorial  Service: 


Provided  by  a  DPH  contractor  at  an  estimated  annual 
cost  to  DPH  of  $122,000. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

January  31,  2001  Finance  Committee  Meeting 


Term  of  Lease: 


Right  of  Renewal: 


Source  of  Funds: 


Description: 


Approximately  ten  years,  upon  approval  of  subject  lease 
by  the  Board  of  Supervisors  to  January  31,  2011. 

One  option  to  extend  the  lease  for  an  additional  ten  years 
with  the  terms  and  conditions  of  the  lease  subject  to 
negotiations  between  the  City  and  the  Landlord.  If  the 
City  chooses  to  exercise  the  option,  the  City  must  give 
written  notice  to  the  Landlord  no  later  than  120  days 
prior  to  the  expiration  of  the  initial  term.  All  such 
renewals  are  subject  to  appropriation  approval  of  the 
Board  of  Supervisors. 

According  to  Mr.  Marc  Trotz  from  the  DPH, 
approximately  $458,434  in  General  Fund  monies  has 
been  budgeted  in  FY  2000-2001  for  the  start-up  and 
operation  costs,  including  rent,  utilities,  janitorial 
services  and  contractual  services  for  the  residential  care 
facility  to  be  located  at  1421  Broderick  Street.  In  future 
years,  Mr.  Trotz  advises  that  the  rent,  and  other 
operating  costs  associated  with  the  proposed  residential 
care  facility  would  be  funded  from  (1)  the  annual  DPH 
General  Fund  monies  budgeted  for  housing  services 
(estimated  at  $844,000  for  FY  2001-2002),  (2)  revenue 
budgeted  from  Medi-Cal  reimbursement  (estimated  at 
$156,000  for  FY  2001-2002),  and  (3)  budgeted  revenue 
from  Supplemental  Security  Income  reimbursement  for 
patient  services  (estimated  at  $200,000  for  FY  2001-2002) 
for  total  estimated  costs  of  $1,200,000.  The  lease  contains 
standard  language  stating  that  it  will  be  terminated  in 
180  days  in  the  event  of  non-appropriation  of  funds  by  the 
Board  of  Supervisors. 

The  subject  master  lease  would  permit  the  DPH  to  lease 
12,417  square  feet  of  1421  Broderick  Street  for 
approximately  ten  years  in  order  to  operate  the  Broderick 
Street  Residential  Care  Facility  to  provide  residential 
care  for  approximately  34  individuals  who  need  24-hour 
care  and  supervision.  According  to  Mr.  Trotz,  the 
proposed  Broderick  Street  Residential  Care  Facility  would 
serve  (a)  individuals  who  are  cognitively  impaired  and/or 
mentally  ill;  (b)  individuals  with  mobility  impairments 
and  medical  conditions  who  need  24-hour  care;  and,  (c) 
individuals  with  primary  medical  conditions,  including 
HIV/AIDS  clients.  Mr.  Trotz  states  that  the  DPH  will 
particularly  target  individuals  who  are  currently  in  the 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

January  31,  2001  Finance  Committee  Meeting 

DPH  system  in  need  of  such  care.  According  to  Mr.  Trotz, 
the  proposed  facility  would  be  operated  through  a  new 
contract  with  the  Page  Street  Guest  House,  a  nonprofit 
organization  (see  Comment  2). 

Comments:  1.     The  Seto  Family  Trust  operated  a  Skilled  Nursing 

Home  until  July  of  2000  at  1421  Broderick  Street. 
According  to  Mr.  Trotz,  there  are  16  shared  bedrooms  and 
2  private  bedrooms,  12  bathrooms  for  resident  use, 
sufficient  office  space,  a  staff  lunge,  an  activities  room,  a 
dining  room,  a  full  kitchen  and  a  small  parking  area. 
Mr.  Trotz  states  that  the  DPH  proposes  to  lease  the  entire 
building,  including  all  of  the  furniture,  fixtures  and 
equipment  (see  Comment  6).  According  to  Mr.  Trotz,  the 
subject  building  is  in  excellent  condition  with  new  boilers, 
security  and  alarm  systems,  is  ADA  (Americans  with 
Disabilities  Act)  compliant  and  has  a  commercial  grade 
kitchen.  Mr.  Trotz  advises  that  there  are  no  scheduled 
improvements  for  the  residential  care  facility  given  its 
current  excellent  condition  and  configuration  for  use  as  a 
skilled  nursing  facility.  DPH  clients  would  move  into 
1421  Broderick  Street  as  soon  as  (1)  the  subject  lease  is 
approved  by  the  Board  of  Supervisors,  (2)  the  Health 
Commission  approves  the  residential  care  service  contract 
for  the  residential  care  facility  (see  Comment  3  below) 
and  (3)  the  State  of  California  issues  the  appropriate 
license  to  operate  the  facility. 

2.  Mr.  Trotz  advises  that  the  DPH  plans  to  enter  into  a 
contract  with  a  nonprofit  agency,  Page  Street  Guest 
House,  at  an  estimated  annual  cost  of  $1,080,000  (See 
Comment  4)  for  the  following  services: 

•  Medication  monitoring,  medical  support,  psychosocial 
services,  substance  abuse  treatment,  housekeeping, 
meals,  and  transportation  to  doctor  appointments. 

•  Professional  property  management,  which  would 
include  program  fee  collection,  accounts  payable 
maintenance,  janitorial  and  security  services  and 
other  provisions  needed  to  maintain  a  clean,  safe  and 
healthy  environment 

Mr.  Trotz  advises  that  approximately  24  of  the  estimated 
34  patients  will  be  SSI  eligible  and  DPH  would  be 
reimbursed   at   $750/month   each   ($9,000   annually  per 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

January  31,  2001  Finance  Committee  Meeting 

patient)  and  the  remaining  approximately  10  patients 
would  be  funded  from  the  DPH  General  Fund  monies. 
The  fees  for  services  to  be  reimbursed  by  SSI  funds  are 
estimated  to  be  between  $200,000  to  $216,000  per  year 
($9,000  x  24  patients).  Mr.  Trotz  states  that  Medi-Cal 
reimbursements  are  generated  through  specific  medical 
and  psychiatric  services  provided  on  site.  Mr.  Trotz 
estimates  the  annual  Medi-Cal  reimbursements  would  be 
approximately  $156,000  for  FY  2001-2002. 

3.  The  contract  was  awarded  to  Page  Street  Guest  House, 
a  nonprofit  organization,  to  provide  the  services 
mentioned  in  Comment  2  above,  at  the  residential  care 
facility  based  on  a  Request  for  Qualifications  Process. 
Page  Street  Guest  House  will  subcontract  with  Richmond 
Area  MultiServices  (RAMS)  in  the  amount  of  $140,000  to 
provide  psychosocial  services,  counseling,  mental  health 
services  and  activities  coordination.  Mr.  Trotz  advises 
that  in  the  Request  for  Qualification  Process,  the  DPH 
received  two  proposals,  one  from  Page  Street  Guest  House 
at  a  cost  of  $1,555,000  and  another  from  the  Chun  and 
Carter  Residential  Care  Facility  for  $556,000.  Mr.  Trotz 
notes  that  the  Chun  and  Carter  Residential  Care 
Facility's  proposal  was  incomplete  and  did  not  meet  all 
service  requirements  specified  in  the  Request  for 
Qualifications.  Mr.  Trotz  further  advises  that  the  DPH 
has  not  previously  contracted  with  Page  Street  Guest 
House,  but  notes  that  Page  Street  Guest  House  has 
operated  a  residential  care  facility  on  Page  Street  in  San 
Francisco  for  approximately  20  to  30  years.  Mr.  Trotz 
advises  that  a  technical  review  panel  consisting  of  the 
DPH  staff  and  community  members  determined  that  Page 
Street  Guest  House  had  the  appropriate  qualifications 
and  experience  to  run  the  residential  care  program  at 
1421  Broderick  Street.  According  to  Mr.  Trotz,  the  DPH 
is  currently  negotiating  the  specifics  of  the  annual  costs  of 
the  contract  with  Page  Street  Guest  House  and  should 
bring  the  contract  before  the  Health  Commission  in 
February. 

4.  According  to  Mr.  Trotz,  the  estimated  final  negotiated 
contract  costs  with  the  Page  Street  Guest  House  would  be 
in  the  amount  of  $1,080,000  per  year  instead  of  the 
previously  proposed  $1,555,000  per  year.  Of  the  estimated 
annual  costs  of  $1,080,000  approximately  $765,600  would 
be     expended    on    staffing    costs,     and     approximately 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

January  31,  2001  Finance  Committee  Meeting 


$314,400  would  be  expended  on  operational  costs, 
staffing  costs  are  as  follows: 


The 


Expenditure  Item 

Estimated  Cost 

Program  Director  (1  FTE) 

$50,000 

Medical  Director  (0.2  FTE) 

25,000 

Activities  Coordinator 

35,000 

Social  Worker  (1  FTE) 

45,000 

Case  Managers  (2  FTE) 

70,000 

Nurse  (2  FTE) 

60,000 

Cook  (2  FTE) 

60,000 

Dishwasher  (1  FTE) 

30,000 

Janitor/Maintenance  (2  FTE) 

52,000 

Receptionist  (4.2  FTE) 

126,000 

Housekeepers  (3  FTE) 

85,000 

Benefits  (20%) 

127,600 

TOTAL 

$765,600 

According  to  Mr.  Trotz,  the  staffing  costs  above  include 
personnel  funded  under  the  RAMS  subcontract  costs.  The 
RAMS  subcontract  is  for  approximately  $140,000  which 
includes  the  cost  of  1  FTE  Social  Worker,  1  FTE  Case 
Manager  and  1  FTE  Program/Activities  Coordinator  plus 
their  benefits. 

Mr.  Trotz  estimates  the  annual  operational  costs  would  be 
$314,400  as  follows: 


Expenditure  Item 

Estimated  Cost 

Property  Taxes 

$8,000 

Insurance 

10,000 

Maintenance  Services/Repairs 

50,000 

Supplies  (including  food) 

100,000 

Equipment,  printing,  post 

56,400 

Laundry 

10,000 

Utilities 

70,000 

Program  Expenses 

10,000 

TOTAL 

$314,400 

Mr.  Trotz  states  that  these  cost  estimates  were  based  on 
(a)  the  operating  costs  incurred  by  the  Seto  Family  Trust 
while  operating  a  Skilled  Nursing  Facility  at  1421 
Broderick  Street;   and,   (b)  estimates  from  Page   Street 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

January  31,  2001  Finance  Committee  Meeting 


Guest  House  on  operation  costs  for  residential  care 
facilities. 

5.  According  to  Mr.  Trotz,  the  total  estimated  costs  and 
revenue  sources  for  the  residential  care  facility  for  FY 
2000-2001  and  for  FY  2001-2002  would  be  as  follows: 

Costs: 

FY  2000-2001  FY  2001-2002 

Annual  Rent  $50,000*  $120,000 

Service  Contract                       127,600  765,600 

Operations                                130,834  314,400 

Start-up  Costs                           150.000  0 

Total  $458,434  $1,200,000 

*  5  months  from  February  1,  2001  through  June  30,  2001. 

Revenue  Sources: 


DPH  General  Fund 
SSI  Reimbursements 
Medi-Cal 

FY  2000-2001 
$458,434 
0 
0 

FY  2001-2002 
$844,000 
200,000 
156.000 

Total 

$458,434 

$1,200,000 

Mr.  Trotz  states  that  the  DPH  did  not  specifically  budget 
revenue  from  SSI  and  Medi-Cal  for  FY  2000-2001  because 
the  DPH  was  unsure  exactly  how  many  patients  would  be 
at  the  residential  care  facility  by  the  end  of  FY  2000-2001. 
Therefore,  any  SSI  and/or  Medi-Cal  reimbursements 
received  would  be  additional  revenue  to  the  DPH  for  FY 
2000-2001,  enabling  the  DPH  to  reduce  its  net  General 
Fund  support. 

As  noted  in  the  table  above,  Mr.  Trotz  estimates  that  the 
annual  total  costs  would  be  approximately  $1,200,000. 
Therefore,  the  unit  costs  per  patient  per  year  would  be 
approximately  $35,294  ($1,200,000  +  34  patients)  and  the 
cost  per  patient  per  day  would  be  approximately  $97 
($35,294  h-  365  days  in  a  year). 

Clients  for  the  proposed  residential  care  facility  at  1421 
Broderick  Street  would  be  transferred  from  DPH  referral 
points  including  San  Francisco  General  Hospital,  Laguna 
Honda  Hospital  and  the  City's  Mental  Health 
Rehabilitation  Facility.  Mr.  Trotz  states  that  it  costs 
between  $250  and  $800  per  day  per  person  to  care  for 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

January  31,  2001  Finance  Committee  Meeting 

patients  in  the  above-mentioned  DPH  facilities,  compared 
to  the  daily  per  person  cost  of  approximately  $97  for  the 
Broderick  Street  facility.  Moving  such  patients  to  the 
residential  care  facility  at  1421  Broderick  allows  the  DPH 
to  provide  a  more  appropriate  level  of  care  for  those 
individuals  who  would  otherwise  get  more  expensive  care 
at  Laguna  Honda  Hospital  and  San  Francisco  General 
Hospital.  Doing  so  would  make  beds  available  at  Laguna 
Honda  Hospital  and  San  Francisco  General  Hospital  for 
patients  who  need  a  higher  level  of  care.  Any  potential 
savings  to  be  achieved  under  the  proposed  program  such 
as  through  expenditure  reductions  at  Laguna  Honda 
Hospital  and  San  Francisco  General  Hospital  will  be 
subject  to  future  budget  policy  decisions. 

6.  Mr.  Trotz  advises  that  the  furniture,  fixtures  and 
equipment  are  being  provided  by  the  Lessor  at  an 
estimated  value  of  approximately  $50,000. 

7.  Mr.  Trotz  states  that  the  proposed  lease  agreement 
contains  a  termination  clause  (Section  3.5)  which  permits 
the  City  to  terminate  the  lease  for  any  reason  upon  180 
days  prior  written  notice.  This  would  permit  the  City  to 
terminate  the  lease  in  six  months  in  the  event  of  non- 
appropriation  of  the  necessary  funding  by  the  Board  of 
Supervisors. 

8.  Ms.  Jean  Medlar  from  the  Real  Estate  Division  reports 
that  the  proposed  rental  rate  of  $0.81  per  square  foot  per 
month  represents  fair  market  value. 

9.  Page  two,  line  five  of  the  proposed  resolution 
incorrectly  states  that  the  base  rent  is  $0.67  per  square 
foot  per  month  when  it  should  state  that  the  base  rent  is 
$0.81  per  square  foot  per  month.  Therefore,  the  proposed 
resolution  should  be  amended  to  revise  the  base  rent 
amount  to  $0.81  per  square  foot  per  month. 

Recommendations:         1.  Amend  the  proposed  resolution  to  correct  an  error  on 

page  two,  line  five,  of  the  proposed  resolution,  which 
states,  "Base  Rent  -  $0.67  per  square  foot  per  month"  to 
read,  "Base  Rent  -  $0.81  per  square  foot  per  month,"  in 
accordance  with  Comment  9  above. 

2.  Approve  the  proposed  resolution,  as  amended. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  and  Labor  Committee 

January  31,  2001  Finance  and  Labor  Committee  Meeting 

Item  4 -File  01-0104 


Department: 


Item: 


Human  Resources  Department  (HRD) 
Fire  Department 

Resolution  authorizing  settlement  of  the  grievance  filed 
by  Glenn  Alston  and  the  International  Federation  of 
Professional  and  Technical  Engineers,  Local  21,  AFL-CIO 
("Local  21"),  on  behalf  of  16  civilian  Classification  6281 
Fire  Safety  Inspectors  in  the  Fire  Department  pursuant 
to  the  Memoranda  of  Understand  between  Local  21  and 
the  City  and  County  of  San  Francisco,  in  the  aggregate 
amount  of  $80,080.48. 


Settlement  Amount:       $81,625.52  (see  Comment  No.  1  below) 


Source  of  Funds: 


Description: 


According  to  Ms.  Pamela  Levin  of  the  Office  of  the 
Controller,  the  grievance  settlement  monies  would  be 
funded  from  the  Fire  Department's  existing  FY  2000-01 
budget. 

The  proposed  resolution  would  authorize  the  Human 
Resources  Director  to  settle  a  grievance  filed  by  Mr. 
Glenn  Alston  and  Local  21  against  the  City.  Mr.  Alston  is 
a  Fire  Department  employee  in  the  civilian  Classification 
6281  Fire  Safety  Inspector.  This  grievance  was  filed  by 
Mr.  Alston  and  Local  21  on  behalf  of  the  16  civilian 
Classification  6281  Fire  Safety  Inspectors  in  the  Fire 
Department  who  did  not  receive  additional  specialized 
training  to  perform  "life-safety  testing",  or  fire  alarm 
testing  required  by  the  Department  of  Building 
Inspection,  which  had  been  received  by  uniformed  H-4 
Inspectors  in  the  Fire  Department.  As  a  result  of 
receiving  such  specialized  training,  the  uniformed  H-4 
Inspectors  were  eligible  to  work  additional  overtime 
hours. 


According  to  the  grievance  filed  by  Local  21,  the  16 
employees  alleged  that  the  Fire  Department  violated 
Section  123(a)  of  the  three-year  Memorandum  of 
Understanding  (MOU)  between  the  City  and  Local  21 
previously  approved  by  the  Board  of  Supervisors  for 
Fiscal  Years  1998-99  through  2000-01.  The  basis  for  the 
Local  21  grievance  is  that  by  not  providing  civilian  6281 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  and  Labor  Committee 

January  31,  2001  Finance  and  Labor  Committee  Meeting 

Fire  Safety  Inspectors  with  the  opportunity  to  receive  the 
same  additional  specialized  training  given  to  uniformed 
H-4  Inspectors,  the  Fire  Department  effectively  denied 
the  civilian  6281  Fire  Safety  Inspectors  the  opportunity  to 
work  on  an  overtime  basis  and  to  receive  such  overtime 
pay  in  an  amount  equivalent  to  the  uniformed  H-4 
Inspectors. 

According  to  Ms.  Alice  Villagomez  of  HRD,  since  Section 
123(a)  of  the  previously  approved  MOU  states  that  the 
civilian  6281  Fire  Safety  Inspectors  shall  receive  parity 
for  overtime  with  the  uniformed  H-4  Inspectors,  the 
grievance  claim  is  justified. 

The  grievance  proceeded  to  arbitration  in  April  of  2000 
but  the  Arbitrator  recommended  that  the  City  and  Local 
21  negotiate  a  settlement  in  lieu  of  a  third  party  award 
determined  by  the  Arbitrator.  The  resulting  settlement 
negotiated  between  the  City  and  Local  21  would,  if 
approved  by  the  Board  of  Supervisors,  authorize  the  City 
to  pay  overtime  wages  retroactive  for  the  approximately 
21.5  month  period  from  July  1,  1998  through  April  19, 
2000  in  the  total  amount  of  $81,625.52,  as  follows: 

•  $5,115.39   for   each   of  14   employees   who   filed   the 
grievance,  for  a  total  of  $71,615.46. 

•  $5,005.03  for  each  of  two  employees1  who  filed  the 
grievance,  for  a  total  of  $10,010.06. 

The  calculation  of  the  above  amounts  is  based  on  the 
information  contained  in  the  Attachment  provided  by 
HRD.  Mr.  Gran  states  that  the  July  1,  1998  date  is  based 
on  the  filing  date  of  the  grievance2,  and  the  April  19,  2000 
date  is  based  on  the  arbitration  hearing  date. 

Comments:  1.   In    reviewing    the     calculations    for    the    proposed 

settlement  amount,  the  Budget  Analyst  found  that  the 
total  amount  had  been  understated  by  $1,545.05, 
resulting  in  a  correct  total  settlement  payable  by  the  City 


1  According  to  Ms.  Mary  Hao  of  HRD,  two  of  the  16  civilian  6281  Fire  Safety  Inspectors  received  a 
slightly  lower  amount  because  they  did  not  qualify  for  the  longevity  and  educational  bonuses  for 
which  the  other  14  employees  were  qualified  to  receive. 

2  Mr.  Gran  advises  that  the  grievance  was  filed  on  July  28,  1998,  but  that  under  the  MOU,  the  claim 
can  extend  retrospectively  for  up  to  20  working  days  prior  to  the  date  that  the  claim  is  actually  filed. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  and  Labor  Committee 

January  31,  2001  Finance  and  Labor  Committee  Meeting 

of  $81,625.52,  instead  of  the  amount  of  $80,080.48  as 
contained  in  the  proposed  resolution.  Mr.  Martin  Gran  of 
the  City  Attorney's  Office  concurs  with  the  Budget 
Analyst's  calculation. 

2.  Mr.  Gran  concurs  with  Ms.  Villagomez's  statement 
that  the  proposed  settlement  agreement  is  justified 
because  the  MOU,  as  previously  approved  by  the  Board  of 
Supervisors,  provides  for  parity  in  overtime  between  the 
civilian  6281  Fire  Safety  Inspectors  and  the  uniformed  H- 
4  Inspectors.  Furthermore,  Mr.  Gran  advises  that  the 
City  prefers  the  narrowly  tailored  negotiated  settlement 
to  a  final  and  binding  third  party  award,  as  would  have 
been  issued  by  the  Arbitrator  if  the  parties  had  failed  to 
negotiate  the  proposed  settlement  agreement,  because  (a) 
such  an  award  could  potentially  affect  other  wage  and 
benefits  issues  beyond  the  specific  life-safety  testing 
training  parity  issue,  raised  in  the  grievance,  and  (b)  the 
City  would  have  been  required  to  accept  the  Arbitrator's 
award  amount  which  could  have  been  greater  than  the 
proposed  settlement  amount. 

3.  According  to  Ms.  Mary  Hao  of  HRD,  as  required  by  the 
proposed  settlement  agreement,  the  Fire  Department  has 
trained  all  16  civilian  6281  Fire  Safety  Inspectors  in  fire 
alarm  testing  and  now  all  16  employees  are  certified  to 
work  on  fire  alarm  testing  required  by  the  Department  of 
Building  Inspection,  and  are  therefore  eligible  to  receive 
pay  for  future  overtime  work  on  such  responsibilities. 

4.  Under  the  proposed  settlement  agreement,  the  16 
civilian  employees  would  expressly  waive  any  right  to 
recover  any  of  their  legal  expenses. 

Recommendations:         1.   Increase    the    aggregate    amount    of   $80,080.48,    as 

contained  in  the  proposed  resolution,  by  $1,545.05  to 
$81,625.52  to  reflect  the  correct  settlement  amount 
calculation,  in  accordance  with  Comment  No.  1  above. 

2.  Approval  of  the  proposed  resolution,  as  amended,  is  a 
policy  matter  for  the  Board  of  Supervisors. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  and  Labor  Committee 

January  31,  2001  Finance  and  Labor  Committee  Meeting 


[arvey  M.  Rose 


Supervisor  Leno 
Supervisor  Peskin 
Supervisor  Gonzalez 
Clerk  of  the  Board 
Controller 
Steve  Kawa 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


JAN  25*01  10:50  FR 


City  "and  County  of  San  Francisco 


December  1 1 ,  2000 


To: 


415    55?    4919 


Attachment 
i"age   1   of"  2 


Department  of  Human  Resources 


ANDREA  R.  GOURDINE 
HUMAN  RESOURCES  DIRECTOR 


Andrea  Gourdine 

Director,  Departmentof  Human  Resources 


lan 


Geoff  Rothrh 
Director,  Enploye 
Department 


From: 


RE: 


e  Relations  Division 
of  Human  Resources 


MaryHaoT^FV 
Employee  Rfflago^Representative 


Glenn  Alston,  et  a/  (Fire  Safety  Inspectors)  Grievance 
ERD  Reference  No.  31-99-0326 


Attached  for  your  signature  is  the  Settlement  Agreement  for  the  above-referenced 
matter. 

This  grievance  dealt  with  overtime  parity  as  provided  in  Local  21  MOU  Section  123(a). 
Pursuant  to  this  section,  the  Class  6281  Fire  Safety  Inspectors  (represented  by  Local 
21)  are  guaranteed  overtime  parity  with  the  H-4  Inspector  class  (represented  by  Local 
798),  except  to  the  extent  that  overtime  assignments  require  fire  suppression  skills  that 
the  Class  6281  Fire  Safety  Inspectors  do  not  have.  Fire  Safety  Inspectors  are  not 
sworn,  uniformed  personnel,  as  they  have  not  have  gone  through  the  fire  academy  like 
the  H-4s;  however,  the  life  safety  testing  overtime  assignment  does  not  require  any  fire 
suppression  skills  and  yet  the  Fire  Safety  Inspectors  were  denied  this  overtime 
assignment  for  many  years.  This  grievance  was  filed  over  two  years  ago,  and  therefore 
back  pay  goes  back  foil  that  time.  The  class  of  grievants  affected  was  sixteen  (16) 
Class  6281  Fire  Safety  Inspectors. 


During  the  April  19,  2000  arbitration  hearing,  the  parties  agreed  to  settle  this  matter. 
The  Union  and  the  Department  agreed  that  the  Department  would  pay  the  sixteen  (16) 
Class  6281  Fire  Safety  Inspectors  38%1  of  the  total  life  safety  overtime  assignments  (in 
hours)  earned  by  the  H-p  classification  between  July  1,  1998  and  April  19,  2000.  Once 
the  38%  figure  was  applied,  the  overtime  rate  applicable  to  the  Fire  Safety  Inspectors 
was  then  computed.   The  total  value  of  the  Fire  Safety  Inspectors  overtime  rate  times 


1  38%  represents  the  percentage  that  fire  safety  inspectors  are  of  the  total  number  of  uniformed  and 
civilian  inspectors.  Class  62^1  Fire  Safety  Inspectors  actually  represent  42%  of  the  total  number  of 
uniformed  and  civilian  inspectors;  however  after  further  discussions,  the  parties  agreed  to  use  38% 
instead. 


44  Gough  Street  •  San  Francisco.  CA  94101-1213 


JRN  25'01  10:50  FR 

Andrea  Gourdine 
Geoff  Rothman 
December  1 1 ,  2000 
Page  2 


their  38%  of  the  total 
among  the  sixteen 
lesser  amount  because 
(3%  of  overtime.)  To 


415  557  4919  TG 


Attachment 
£age  2   ot  2 


Life  Safety  overtime  hours  worked  was  then  distributed  equally 
ffectud  inspectors.  Two  of  the  sixteen  inspectors  received  a  slightly 
tiey  did  not  qualify  for  the  longevity  and  the  educational  bonus 
,  the  formula  used  is  as  follows: 


recap 

"Total  number  of  Life  Safety  overtime  hours  between  July  1,  1998  and  April  19,  2000 

Times 

38%  (the  percentage  that  Fire  Safety  Inspectors  are  of  the  total  number  of  uniformed 

and  civilian  inspectors) 

Times 

overt  me  rate  applicable  to  Fire  Safety  Inspectors 

Divided  by 

16" 


Then  Chief  of 
approved  of  this  calculat 


Department  Demmons  and  Bureau  of  Fire  Inspection  Chief  Massetani 
on.  The  total  cost  of  this  settlement  is  $81 ,625.52. 


Please  do  not  hesitate  to 
your  prompt  attention  to 


contact  me  at  x4981  if  you  have  any  questions.  Thank  you  for 
this  matter. 


\\OHR-MlS-0iSVR\DATA\SHARE\4RO\GrievancesWston  s«Demenc  memo.doc 


Main  Library 


[All  Committees] 
City  and  County  of  £an  Francisco     Government  Document  Section 
Meeting  Minutes 
Finance  Committee 

Members:  Supervisors  Mark  Leno,  Aaron  Peskin  and  Matt  Gonzalez 
Clerk:  Gail  Johnson 


lO  )      Wednesday,  February  07,  2001 


10:00  AM 

Regular  Meeting 


City  Hall,  Room  263 


Members  Present:      Mark  Leno,  Aaron  Peskin,  Matt  Gonzalez. 


MEETING  CONVENED 


002053 


The  meeting  convened  at  10:06  a.m. 


DOCUMENTS  DEPT. 

FEB  1  h  2001 

SAN  FRANCISCO 
PUBLIC  LIBRARY 


[Golden  Gate/Neighborhood  Park  Bond  Award] 
Supervisor  Newsom 

Motion  awarding  Bonds  and  fixing  definitive  interest  rates  for  $17,060,000  General  Obligation  Bonds  (Golden 

Gate  Park  Improvements,  1992)  and  Series  2000E;  $14,060,000  General  Obligation  Bonds  (Neighborhood 

Recreation  and  Park  Facilities  Improvement  Bonds,  2000)  Series  2000F.  (Mayor) 

1 1/15/00,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee. 

2/1/01 ,  TRANSFERRED  to  Finance  Committee.  New  committee  structure. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Karen  Ribble,  Bond  Associate,  Mayor's  Office 

of  Public  Finance. 

AMENDED,  AN  AMENDMENT  OF  THE  WHOLE  BEARING  NEW  TITLE. 

Motion  awarding  Bonds  and  fixing  definitive  interest  rates  for  $17,060,000  General  Obligation  Bonds  (Golden 

Gate  Park  Improvements,  1992)  and  Series  2001A;  $14,060,000  General  Obligation  Bonds  (Neighborhood 

Recreation  and  Park  Facilities  Improvement  Bonds,  2000)  Series  200 IB.  (Mayor) 

AWARDED  by  the  following  vote: 

Ayes:  3  -  Leno,  Peskin,  Gonzalez 


010039        [Airport  Lease  Agreement  Modification  for  United  Airlines,  Inc.] 

Resolution  approving  Lease  Modification  Number  Three  for  Lease  No.  73-0066  between  United  Airlines,  Inc. 
and  the  City  and  County  of  San  Francisco,  acting  by  and  through  its  Airport  Commission.  (Airport  Commission) 
1/2/01 ,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee. 
2/1/01,  TRANSFERRED  to  Finance  Committee.  New  committee  structure. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  John  Martin,  Airport  Director;  Theodore 
Lakey,  Deputy  City  Attorney;  Gary  Franzella,  Assistant  Deputy  Airport  Director,  Aviation  Management, 
Airport. 

Continued  to  February  21,  2001. 
CONTINUED  by  the  following  vote: 
Ayes:  3  -  Leno,  Peskin,  Gonzalez 


City  and  County  of  San  Francisco 


Printed  at  2:59  P.\f  on  2/1  ZVl 


Finance  Committee 


Meeting  Minutes 


February  7,  2001 


010052        [Airport  Lease  Agreement  for  Plot  6  to  United  Airlines,  Inc.] 

Resolution  approving  lease  agreement  for  Plot  6  between  United  Airlines,  Inc.  and  the  City  and  County  of  San 
Francisco,  acting  by  and  through  its  Airport  Commission.  (Airport  Commission) 
1/10/01,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee 
2/1/01 ,  TRANSFERRED  to  Finance  Committee.  New  committee  structure. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  John  Martin,  Airport  Director;  Theodore 
Lakey,  Deputy  City  Attorney. 
Continued  to  February  2 1 ,  2001. 
CONTINUED  by  the  following  vote: 
Ayes:  3  -  Leno,  Peskin,  Gonzalez 


010047        |Law  Enforcement  Training] 

Resolution  authorizing  the  Chief  of  Police  to  execute  an  agreement  with  the  State  of  California  to  obtain 
funding  in  the  amount  of  One  Hundred  Three  Thousand  Three  Hundred  Fifty  Eight  Dollars  ($103,358)  for 
obtaining  training  equipment.  (Police  Department) 
1/8/01,  RECEIVED  AND  ASSIGNED  to  Housing  and  Social  Policy  Committee. 
2/1/01,  TRANSFERRED  to  Finance  Committee.  New  committee  structure. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Lieutenant  Richard  Parry,  Police  Department. 
RECOMMENDED.,  by  the  following  vote: 
Ayes:  3  -  Leno,  Peskin,  Gonzalez 


002187        [Contract  between  the  Dept.  of  Public  Health  and  Health  Advocates,  LLP  to  provide  uncompensated 
care  recovery  services] 

Resolution  authorizing  the  Director  of  Public  Health  and  the  Purchaser  to  execute  a  contract  between  the  City 
and  County  of  San  Francisco  and  Health  Advocates,  LLP  to  provide  uncompensated  care  recovery  services. 
(Public  Health  Department) 

12/13/00,  RECEIVED  AND  ASSIGNED  to  Public  Health  and  Environment  Committee. 

12/28/00,  TRANSFERRED  to  Finance  and  Labor  Committee.  At  the  request  of  the  President,  this  matter  is  to  be  scheduled  for  the 
January  10,  2001  meeting. 

1/17/01,  CONTINUED.  Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Monique  Zmuda,  Chief  Financial  Officer, 
Department  of  Public  Health,  Steve  Reid,  President,  Paralign;  Diane  Sovereign  (attorney),  Linda  Safir,  Director  of  Sales,  Paralign,  Karla 
Fine,  Manager,  Paralign;  Fanny  Mayorga,  Paralign;  Juan  Sosa,  Paralign;  Helen  Lim,  Paralign,  Robert  McCarthy  (registered  to  speak  for 
Paralign);  Al  Leibovic,  Health  Advocates;  Theodore  Lakey,  Deputy  City  Attorney;  Edward  Harrington,  Controller. 
Continued  to  January  3 1 ,  2001 . 

1/31/01,  CONTINUED.  Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Monique  Zmuda,  Chief  Financial  Officer, 
Department  of  Public  Health. 
Continued  to  February  7,  2001 . 
2/1/01 ,  TRANSFERRED  to  Finance  Committee.  New  committee  structure. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Monique  Zmuda,  Chief  Financial  Officer, 
Department  of  Public  Health;  Virginia  Harmon,  Interim  Director,  Human  Rights  Commission;  Diana  Rivera, 
Head  of  Patient  Accounting,  San  Francisco  General  Hospital,  Department  of  Public  Health;  Cheryl  Bregman, 
Deputy  City  Attorney;  Steve  Reid,  President,  Paralign;  Al  Leibovic,  Managing  Partner,  Health  Advocates; 
Linda  Safir,  Director  of  Sales,  Paralign;  Karla  Fine,  Manager,  Paralign;  Jose  Martinez,  Account  Director, 
Paralign;  Fanny  Mayorga,  Supervisor,  Paralign;  Luvi  Bone,  Paralign;  Beatrice  Gonzalez,  Paralign;  Patricia 
Putynkowski,  Paralign;  Juan  Sosa,  Paralign;  Rafael  Arteagia,  Paralign;  Helen  Lim,  Paralign;  Diane 
Sovereign,  Attorney,  representing  Paralign;  Lock  Holmes,  Attorney,  representing  Paralign;  Robert  McCarthy, 
representing  Paralign. 

CONTINUED  TO  CALL  OF  THE  CHAIR  by  the  following  vote: 
Ayes:  3  -  Leno,  Peskin,  Gonzalez 


City  and  County  of  San  Francisco 


Printed  at  2:59  PM  on  2/12/01 


Finance  Committee 


Meeting  Minutes 


February  7,  2001 


010112        [Reserved  Funds,  Workers'  Compensation] 

Hearing  to  consider  release  of  reserved  workers'  compensation  funds  (2000-2001  budget)  for  eight  (8) 

departments  -  Fire,  Police,  Public  Health,  Human  Services,  Sheriff,  Parking  and  Traffic,  Juvenile  Court,  and 

Recreation  and  Park  in  the  amount  of  $9,410,038  to  cover  expenditures  for  the  remainder  of  the  current  fiscal 

year.  (Human  Resources  Department) 

1/19/01,  RECEIVED  AND  ASSIGNED  to  Finance  Committee. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Edward  Harrington,  Controller;  Minh  Vu, 

Deputy  Director,  Workers  Compensation  Division,  Department  of  Human  Resources. 

Release  of  reserved  funds  in  the  amount  of  $9,410,038  approved. 

APPROVED  AND  FILED  by  the  following  vote: 

Ayes:  2  -  Leno,  Peskin 

Absent:  1  -  Gonzalez 


010150        [Final  Negative  Declaration,  Jobs-Housing  Linkage  Ordinance] 

Resolution  adopting  Final  Negative  Declaration,  finding  and  determining  that  the  Jobs-Housing  Linkage 
Ordinance  will  have  no  significant  impact  on  the  environment,  and  adopting  and  incorporating  findings  of  Final 
Negative  Declaration.  (Planning  Department) 

(Final  Negative  Declaration  adopted  and  issued  on  April  27,  1999.) 
1/24/01,  RECEIVED  AND  ASSIGNED  to  Finance  Committee. 

Heard  in  Committee.  Speakers:  Supervisor  Ammiano;  Harvey  Rose,  Budget  Analyst;  Gerald  Green,  Director 
of  Planning;  Marcia  Rosen,  Mayor's  Office  of  Housing;  Calvin  Welch,  Council  of  Community  Housing;  Jim 
Chappell,  President,  SPUR;  Jose  Wheelock;  Theodore  Lakey,  Deputy  City  Attorney. 
RECOMMENDED  by  the  following  vote: 
Ayes:  3  -  Leno,  Peskin,  Gonzalez 


City  and  County  of  San  Francisco 


Printed  at  2:59  PM  on  2/12/01 


Finance  Committee  Meeting  Minutes  February  7,  2001 


000276        [Planning  Code  amendment  to  rename  "Office  Affordable  Housing  Production  Program"  as  the  "Jobs- 
Housing  Linkage  Program"  and  to  apply  the  program  to  hotel,  entertainment,  and  retail  space 
according  to  square  footage] 
Supervisors  Ammiano,  Bierman 

Ordinance  amending  Article  III,  Chapter  II,  Part  II  of  the  San  Francisco  Municipal  Code  (Planning  Code)  by 

amending  Sections  313,  313.1,  313.2,  313.3,  313.4,  313.5,  313.6,  313.7,  313.8,  313.9,  313.10,  313.11,  313.12, 

313.13,  and  313.14,  to  rename  the  "Office  Affordable  Housing  Production  Program"  as  the  "Jobs-Housing 

Linkage  Program,"  to  apply  the  program  to  all  new  and  expanded  hotel  space  of  at  least  25,000  square  feet,  to 

all  new  and  expanded  entertainment  space  of  at  least  25,000  square  feet,  to  all  new  and  expanded  retail  space  of 

at  least  25,000  square  feet,  and  to  all  new  and  expanded  research  and  development  space  of  at  least  25,000 

square  feet;  to  set  forth  the  number  of  housing  units  to  be  constructed  for  each  type  of  development  subject  to 

this  Ordinance;  to  increase  the  number  of  housing  units  and  fees  for  office  developments;  and  by  adding 

Section  313.15  to  require  a  study  every  five  years  determining  the  demand  for  housing  created  by  commercial 

development. 

2/9/00,  PREPARED  IN  COMMITTEE  AS  AN  ORDINANCE.  Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Julian 

Low,  Supervisor  Katz's  Aide;  Gerald  Green,  Director  of  Planning,  Supervisor  Bierman;  Supervisor  Ammiano;  Ted  Lakey,  Deputy  City 

Attorney;  Calvin  Welch;  Jim  Gonzalez,  Information  Technology  Coalition,  Mane  Jones,  S  F.  Partnership,  Robert  McCarthy;  Chns 

Moore.    To  be  referred  to  City  Planning  for  review  and  comments. 

2/9/00,  CONTINUED  TO  CALL  OF  THE  CHAIR.  2/1 5/00.  Referred  to  City  Planning  Commission.    3/22/00,  From  City  Planning,  will 

not  be  able  to  hear  this  item  until  May  15. 

5/10/00,  AMENDED,  AN  AMENDMENT  OF  THE  WHOLE  BEARING  NEW  TITLE.  Heard  in  Committee    Speakers    Supervisor 

Ammiano;  Calvin  Welch,  Council  of  Community  Housing;  Sue  Hestor;  Chris  Daly,  Mission  Agenda,  Beryl  Magilavy;  Joyce  Miller, 

Marie  Jones,  S.  F.  Partnership;  Cathy  Brandhorst.  Referred  to  City  Planning  Commission. 

5/10/00.  CONTINUED  AS  AMENDED.  Continued  to  call  of  the  chair. 

6/5/00,  SUBSTITUTED.  Supervisor  Ammiano  submitted  a  substitute  ordinance  bearing  new  title 

6/5/00,  ASSIGNED  to  Finance  and  Labor  Committee.  Transmitted  to  Planning  Commission  for  public  hearing  and  recommendation. 

10/16/00,  SUBSTITUTED.  Supervisor  Ammiano  submitted  a  substitute  ordinance  bearing  new  title. 

Transmitted  to  Planning  Commission  for  public  hearing  and  recommendation. 

10/16/00,  ASSIGNED  to  Finance  and  Labor  Committee. 

2/1/01 ,  TRANSFERRED  to  Finance  Committee.  New  Committee  Structure. 

Heard  in  Committee.  Speakers:  Supervisor  Ammiano;  Harvey  Rose,  Budget  Analyst;  Gerald  Green,  Director 
of  Planning;  Marcia  Rosen,  Mayor's  Office  of  Housing;  Calvin  Welch,  Council  of  Community  Housing;  Jim 
Chappell,  President,  SPUR;  Jose  Wheelock;  Theodore  Lakey,  Deputy  City  Attorney. 
Supervisor  Ammiano  presented  an  Amendment  of  the  Whole  containing  technical  amendments. 
AMENDED,  AN  AMENDMENT  OF  THE  WHOLE  BEARING  SAME  TITLE. 
RECOMMENDED  AS  AMENDED  by  the  following  vote: 
Ayes:  3  -  Leno,  Peskin,  Gonzalez 


City  and  County  of  San  Francisco  4  Printed  at  2: 59  PM  on  2/12/01 


Finance  Committee  Meeting  Minutes  February  7,  2001 


010149        [Jobs-Housing  Linkage  Program] 

Ordinance  amending  Article  III,  Chapter  II,  Part  II  of  the  San  Francisco  Municipal  Code  (Planning  Code)  by 
amending  Sections  313,  313.1,  313.2,  313.3,  313.4,  313.5,  313.6,  313.7,  313.8,  313.9,  313.10,  313.11,  313.12, 
313.13,  and  313.14,  to  rename  the  "Office  Affordable  Housing  Production  Program"  as  the  "Jobs-Housing 
Linkage  Program,"  to  apply  the  program  to  all  new  and  expanded  hotel  space  of  at  least  25,000  square  feet,  to 
all  new  and  expanded  entertainment  space  of  at  least  50,000  square  feet,  and  to  all  other  new  and  expanded 
retail  space  of  at  least  100,000  square  feet;  to  set  forth  the  number  of  housing  units  to  be  constructed  for  each 
type  of  development  subject  to  this  ordinance;  to  set  forth  fees  for  each  type  of  development  subject  to  this 
ordinance;  to  increase  the  number  of  housing  units  and  fees  for  office  developments;  and  by  adding  Section 
313.15,  to  require  a  study  every  five  years  determining  the  demand  for  housing  created  by  commercial 
development.  (Planning  Department) 

(Planning  Resolution  No.  16044  adopted  December  7,  2000  recommending  the  proposed  amendment  to  the 

City  Planning  Code;  Planning  File  No.  1999.178T.) 

(Companion  measure  to  File  010150.) 

1/24/01,  RECEIVED  AND  ASSIGNED  to  Finance  Committee.  Board  President  requests  this  item  be  calendard  at  the  February  7, 2001 

meeting 

Heard  in  Committee.  Speakers:  Supervisor  Ammiano;  Harvey  Rose,  Budget  Analyst;  Gerald  Green,  Director 
of  Planning;  Marcia  Rosen,  Mayor's  Office  of  Housing;  Calvin  Welch,  Council  of  Community  Housing;  Jim 
Chappell,  President,  SPUR;  Jose  Wheelock;  Theodore  Lakey,  Deputy  City  Attorney. 
TABLED  by  the  following  vote: 

Ayes:  3  -  Leno,  Peskin,  Gonzalez 


ADJOURNMENT 

The  meeting  adjourned  at  1:32  p.  m. 


City  and  County  of  San  Francisco  5  Printed  at  2:59  PM  on  2/12/01 


[Budget  Analyst  Report] 

Susan  Horn 

Main  Library-Govt.  Doc.  Section 


n 

1/7/0/ 


CITY  AND  COUNTY 


oFSANEKANdSfflCUMENTS  DEPT. 
FEB  -  6  2001 


BOARD  OF  SUPERVISORS 


BUDGET  ANALYST 

1390  Market  Street,  Suite  1025,  San  Francisco,  CA  94102  (415)  554-7642 

FAX  (415)  252-0461 


SAN  FRANCISCO 
PUBLIC  LIBRARY 


February  1,  2001 


TO:  ^Finance  Committee 

FROM:        ;  Budget  Analyst 

SUBJECT:  February  7,  2001  Finance  Committee  Meeting 


Item  1  -  File  00-2053 

Department: 

Item: 


Description: 


Mayor's  Office  of  Public  Finance 

Motion  awarding  bonds  and  fixing  definitive  interest 
rates  for  $17,060,000  General  Obligation  Bonds  (Golden 
Gate  Park  Improvements,  1992),  Series  2001A; 
$14,060,000  General  Obligation  Bonds  (Neighborhood 
Recreation  and  Park  Facilities  Improvement  Bonds, 
2000),  Series  2001B. 

On  October  10,  2000,  the  Board  of  Supervisors  approved  a 
resolution  authorizing  and  directing  the  sale  of  up  to 
$17,060,000  in  General  Obligation  Bonds  (File  No.  00- 
1613,  Golden  Gate  Park  Improvements,  1992)  to  fund  the 
construction  and/or  reconstruction  of  Golden  Gate  Park's 
utilities  and  infrastructure.  Additionally,  on  October  10, 
2000,  the  Board  of  Supervisors  approved  a  separate 
resolution  authorizing  and  directing  the  sale  of  up  to 
$14,060,000  in  additional  General  Obligation  Bonds  (File 
No.  00-1612,  Neighborhood  Recreation  and  Park  Faculties 
Improvement  Bonds,  2000)  to  provide  for  the  acquisition, 
construction  and/or  reconstruction  of  neighborhood 
recreation  and  park  facilities  and  properties. 


Memo  to  Finance  and  Labor  Committee 
February  7,  2001  Finance  Committee  Meeting 


Comments: 


1.  Ms.  Karen  Ribble  of  the  Mayor's  Office  of  Public 
Finance  advises  that  the  bids  for  the  proposed  sale  of 
$31,120,000  in  General  Obligation  bonds  are  scheduled  to 
be  opened  at  8:00  a.m.  on  February  7,  2001.  According  to 
Ms.  Ribble,  unless  all  of  the  bids  are  rejected,  the  Finance 
Committee  will  be  asked  to  award  the  bonds  to  the  bidder 
whose  bid  represents  the  lowest  true  interest  cost  to  the 
City.  Ms.  Ribble  reports  that  the  Mayor's  Office  of  Public 
Finance  will  submit  an  Amendment  of  the  Whole  to  the 
Finance  Committee's  scheduled  meeting  at  10:00  a.m.  on 
February  7,  2001,  which  will  list  the  winning  bidder,  the 
other  bidders  and  the  interest  rate  that  each  bidder 
offered  to  the  City.  Additionally,  at  the  February  7,  2001, 
Finance  Committee  meeting,  the  Mayor's  Office  of  Public 
Finance  will  provide  the  debt  service  payment  schedule, 
including  the  bond  maturity  dates,  principal  amounts  and 
interest  rates. 


2.  The  expenditure  of  bond  proceeds  will  be  subject  to 
appropriation  approval  by  the  Mayor  and  the  Board  of 
Supervisors.  According  to  Ms.  Ribble,  a  supplemental 
appropriation  for  expenditure  of  such  bond  proceeds  is 
expected  to  be  submitted  to  the  Board  of  Supervisors  in 
mid-February  of  2001. 


Recommendation: 


Approve  a  motion  awarding  the  subject  bonds  to  the  low 
bidder,  which  represents  the  lowest  true  interest  cost  to 
the  City. 


BOARD  OF  SUPERVISORS 

BUDGET  ANALYST 

■2 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 

Item  2 -File  01-0039 


Department: 
Item: 

Lessor: 
Lessee: 
Term  of  Lease: 

Right  of  Renewal: 
Description: 


Airport 

Resolution  approving  Lease  Modification  No.  3  for  Lease 
No.  73-0066  between  United  Airlines,  Inc.  and  the  City, 
acting  by  and  through  its  Airport  Commission. 

City  and  County  of  San  Francisco 

United  Airlines,  Inc. 

The  subject  lease  was  first  approved  in  1973  for  an  initial 
20-year  term,  to  expire  in  1993,  with  two  10-year  options  at 
the  discretion  of  the  lessee. 

As  noted  above,  the  20-year  lease  provided  for  two  10-year 
extensions  at  the  discretion  of  the  lessee,  for  a  total  lease 
period  of  up  to  40  years.  In  1993,  United  Airlines  exercised 
its  first  10-year  extension,  which  is  due  to  expire  in  2003. 

On  December  5,  2000  the  Airport  Commission  approved 
Modification  No.  3  of  Lease  73-0066  between  the  Airport 
and  United  Airlines,  Inc.  Under  lease  73-0066,  United 
Airlines  currently  occupies  129.75  acres  of  land  used  by 
United  Airlines  for  employee  parking  and  its  Maintenance 
Operations  Center  (MOC)  for  aircraft  maintenance.  The 
subject  lease  was  originally  approved  in  1973  for  an  initial 
term  of  20  years,  with  two  10-year  extension  options  at  the 
discretion  of  the  lessee.  According  to  Ms.  Dorothy  Schimke 
of  the  Airport,  in  1993  United  Airlines  exercised  its  first 
ten-year  option,  which  is  due  to  expire  on  June  30,  2003. 
The  property  leased  by  United  Airlines  is  located  at  the 
intersection  of  San  Bruno  Avenue  and  the  Bayshore 
Freeway. 

The  Airport  is  currently  developing  a  Multi-Modal 
Transportation  Center,  which  includes,  among  other 
elements,  expansion  of  short-term  Parking  Lot  DD,  which 
is  adjacent  to  the  property  leased  by  United  Airlines,  and 
the  extension  of  the  AirTrain  (the  Airport  light  rail  system) 
to  the  Multi-Modal  Transportation  Center  and  Parking  Lot 
DD  (see  Attachment,  provided  by  the  Airport,  for  a 
description  of  these  projects).  According  to  Ms.  Schimke, 
Parking  Lot  DD  currently  consists  of  Airport  employee  and 

BOARD  OF  SUPERVISORS 

BUDGET  ANALYST 

3 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 


Airport  tenant  employee  parking.  Ms.  Schimke  advises  that 
Parking  Lot  DD  will  be  expanded  and  initially  used  for 
additional  employee  parking,  and  upon  completion  of  the 
Multi-Modal  Transportation  Center,  the  expanded  portion 
of  Parking  Lot  DD  would  be  converted  for  long-term  public 
parking.  Ms.  Schimke  advises  that  in  order  for  the  Airport 
to  complete  such  an  expansion,  the  Airport  needs  access  to 
Parking  Lot  DD  through  a  portion  of  the  property  currently 
leased  by  United  Airlines.  Under  the  proposed  Modification 
No.  3  to  Lease  73-0066,  United  Airlines  has  agreed  to 
relinquish  to  the  Airport  0.74  acres  of  property.  In  return, 
the  Airport  has  agreed  to  provide  United  Airlines  with 
additional  space  of  up  to  2.61  acres  for  employee  parking, 
as  discussed  below. 

The  proposed  transfer  of  acreage  under  the  subject  lease 
Modification  No.  3  would  take  place  in  the  two  following 
phases: 

(1)  Ms.  Schimke  reports  that  on  December  1,  2000,  United 
Airlines  relinquished  0.74  of  its  total  129.75  in  leased 
property  back  to  the  Airport,  leaving  129.01  acres  under 
the  subject  lease  with  United  Airlines  (see  Comment  No. 
2). 

(2)  In  exchange  for  relinquishing  the  0.74  acres  discussed 
above,  the  Airport  agreed  to  provide  United  with  150 
additional  parking  spaces  for  United  Airlines  employees 
that  will  be  added  to  the  lease  at  a  future  date,  totaling 
a  maximum  of  2.61  acres.  However,  Ms.  Schimke 
advises  that  the  amended  lease  with  the  Airport  will  not 
include  the  additional  acreage  until  the  Airport 
completes  the  Multi-Modal  Transportation  Center  and 
the  AirTrain,  in  approximately  four  to  six  years,  as 
explained  in  the  Attachment  to  this  report.  During  the 
interim  period,  between  the  time  that  United  Airlines 
relinquished  0.74  acres  of  space  on  December  1,  2000 
and  the  completion  of  the  Multi-Modal  Transportation 
Center  and  the  AirTrain  Extension,  the  Airport  has 
granted  United  .Airlines  a  month-to-month  permit, 
effective  December  1,  2000,  for  approximately  2.61  acres 
to  accommodate  the  additional  employee  parking. 
Because  the  guideway  for  the  AirTrain  will  require  use 
of  part  of  the  2.61  acres,  the  Airport  will  not  be  able  to 
determine  the  exact  amount  of  additional  space  that  will 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

4 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 


Rent  paid  by 
United  Airlines 
to  the  Airport: 


be  added  to  tbe  existing  lease  until  the  Multi-Modal 
Transportation  Center  and  the  AirTrain  are  completed. 
Therefore,  proposed  lease  Modification  No.  3  states  that 
the  Airport  and  United  Airlines  agree  to  expand  the 
existing  lease  "after  the  Multi-Modal  Transportation 
Center  and  the  AirTrain  Extension  are  completely 
designed  and  constructed... without  the  requirement  of 
formal  amendment  to  the  Lease  or  the  approval  of  any 
party... as  to  the  dimensions  and  configuration  of  such 
space." 


Rent  for  the  additional  space  to  be  charged  by  the  Airport 
to  United  Airlines  will  be  at  the  same  rate  of  $35,879.50 
per  acre  charged  for  the  existing  lease,  both  when  the  space 
is  under  permit  and  after  it  is  added  to  the  lease.  The  rate 
of  $35,879.50  first  became  effective  in  1998,  according  to 
Ms.  Schimke. 


Permit: 


Ms.  Schimke  advises  that  when  the  first  10-year  lease 
extension  with  United  Airlines  was  negotiated  in  1993, 
United  Airlines  and  the  Airport  agreed  to  an  annual  rent  of 
$32,617.73  per  acre  for  the  first  five  years  of  the  10-year 
extension,  with  one  increase  of  $3,261.77  to  an  annual  rent 
of  $35,879.50,  effective  July  1,  1998,  for  the  remaining  five 
years  of  the  10-year  extension,  expiring  on  June  30,  2003. 
Therefore,  during  the  first  10-year  extension  between  1993 
and  2003,  the  rent  charged  to  United  Airlines  will  have 
increased  by  only  approximately  10  percent,  or  by 
approximately  an  average  of  one  percent  per  year. 

Under  the  proposed  lease  Modification  No.  3,  the  exchange 
in  space  would  result  in  a  maximum  net  increase  of  1.87 
acres  used  by  United  Airlines  in  this  location  (the  2.61 
acres  in  new  parking  for  United  Airlines  employees,  less 
the  0.74  acres  relinquished  back  from  United  Airlines  to 
the  Airport). 

According  to  Ms.  Schimke,  the  month-to-month  permit 
granted  to  United  Airlines  for  the  2.61  acres  allows  the 
Airport  to  modify  or  terminate  the  permit  with  30-days 
notice.  Ms.  Schimke  advises  that  since  the  Airport  must  use 
portions  of  the  2.61  acres  under  permit  to  United  Airlines 
for  construction  of  the  AirTrain  extension,  the  Airport  will 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 
5 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 


Compliance  with 
City  Laws: 


Comments: 


reduce  the  number  of  acres  provided  to  United  Airlines 
under  permit  as  needed. 


In  addition,  the  proposed  lease  Modification  No.  3  would 
update  the  existing  lease  to  reflect  changes  to  the 
Administrative  Code  and  other  City  requirements,  such  as 
provisions  requiring  compliance  with  the  ban  on  tropical 
hardwoods  and  virgin  redwood,  the  MacBride  Principles 
related  to  employment  inequity  in  Northern  Ireland,  the 
Non-Discrimination  in  City  Contracts  and  Equal  Benefits 
Ordinance,  and  the  Minimum  Compensation  Ordinance. 

1.  As  previously  noted,  the  proposed  lease  modification 
would  ultimately  result  in  a  maximum  net  increase  of  1.87 
acres  of  space  for  United  Airlines.  The  net  rent  increase 
that  the  Airport  would  receive  annually  from  United 
Airlines  is  $67,095  per  year,  as  shown  in  the  table  below. 
However,  the  increased  acreage  to  be  added  to  the  lease 
will  most  likely  be  less  than  the  estimated  1.87  acres  since 
the  parking  parcel  now  under  permit  will  be  reduced  by 
AirTrain  construction  as  described  above.  Ms.  Schimke 
advises  that  the  Airport  will  not  add  more  than  2.61  acres 
to  the  lease  with  United  Airlines.  The  estimated  net 
increased  rent  of  $67,095  to  be  paid  by  United  to  the 
Airport  is  shown  in  the  table  below.  The  net  increased  rent 
applies  immediately  to  the  estimated  2.61  acres  provided  to 
United  Airlines  under  a  month-to-month  permit  effective 
December  1,  2000,  as  well  as  to  the  final  acreage  after  it  is 
incorporated  into  the  existing  lease.  As  stated  previously, 
Ms.  Schimke  reports  that  the  Airport  expects  to  complete 
the  Multi-Modal  Transportation  Center  and  the  AirTrain 
Extension  in  approximately  four  to  six  years,  as  stated  in 
the  Attachment,  provided  by  the  Airport. 


BOARD  OF  SUPERVISORS 

BUDGET  ANALYST 

6 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 


Annual  Cost 
per  Acre 

Total 
Acres 

Annual 
Airport  Revenues 

Existing  Lease 

$35,879.50 

129.75 

4,655,365 

Space  relinquished  by 
United  Air  Lines  to 
the  Airport 

$35,879.50 

(0.74) 

(26,550) 

Estimated  additional  space 
to  be  leased  by 
United  Airlines 

$35,879.50 

2.61 

93,645 

New  Total 

131.62 

$4,722,460 

Net  Increase 

1.87 

$67,095 

2.  As  stated  previously,  Ms.  Schimke  advises  that  on 
December  1,  2000,  United  Airlines  relinquished  0.74  acres 
of  space  leased  under  the  existing  contract.  In  addition,  the 
Airport  issued  to  United  Airlines  a  permit,  effective 
December  1,  2000,  to  use  an  additional  2.61  acres  for 
employee  parking,  at  which  point  United  Airlines  began 
paying  additional  rent  to  the  Airport  based  upon  the 
additional  2.61  acres.  Therefore,  the  Budget  Analyst 
recommends  that  the  subject  resolution  be  amended  to 
provide  for  retroactive  authorization.  Ms.  Schimke  advises 
that  the  permit  to  United  for  use  of  the  2.61  acres  will  be 
terminated  when  the  space  is  formally  incorporated  into 
the  existing  lease. 

3.  As  noted  above,  United  Airlines  will  be  charged  rent  for 
the  additional  2.61  acres  at  the  same  rate  of  $35,879.50  per 
acre  charged  for  the  existing  lease  both  when  the  space  is 
under  permit  and  after  it  is  added  to  the  lease.  Ms. 
Schimke  advises  that  the  rate  of  $35,879.50  first  became 
effective  July  1,  1998.  The  Budget  Analyst  notes  that  not 
only  has  this  rent  of  $35,879.50  per  acre  not  been  increased 
since  July  1,  1998,  or  for  2.5  years,  but  additionally,  over 
the  10-year  lease  extension,  which  expires  June  30,  2003, 
the  rental  increases  to  United  Airlines  in  total  have 
averaged  approximately  one  percent  per  year  over  10  years, 
or  a  total  increase  of  $3,261.77,  which  adjusted  the  1993 
rent  of  $32,617.73  per  acre  to  the  current  rent  of  $35,879.50 
per  acre. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


fid    fjt>  revised   2/2/01 

Item  2   -   File   01-0039 
Memo  to  Finance  Committee 
February  7,  2001  Finance  Committee  Meeting 

Had  this  rent  amount  been  adjusted  upward  according  to 
the  total  11.24  percent  increase  in  the  Consumer  Price 
Index  (CPI)  between  July  1,  1998  and  January  2001,  the 
rent  would  have  increased  by  $4,302.86  to  an  annual  rent 
of  $39,912.35  per  acre.  Furthermore,  the  Budget  Analyst 
questions  why  the  Airport  does  not  require  that  United 
Airlines  pay  the  Airport  an  adjusted  rent  based  on  current 
fair  market  rent  for  the  net  additional  1.87  acres  to  be  used 
by  United  Airlines  (the  2.61  acres  in  new  employee  parking 
for  United  Airlines,  less  the  0.74  acres  relinquished  back  by 
United  Airlines  to  the  Airport). 

According  to  Ms.  Schimke,  the  Airport  agreed  to  the 
proposed  exchange  of  property  with  United  Airlines  and  the 
rental  rate  of  $35,879.50  because  the  0.74  acres  United 
Airlines  has  relinquished  to  the  Airport  is  critical  to  the 
completion  of  the  AirTrain  Extension  and  the  Multi  Modal 
Center.  The  Budget  Analyst  notes,  however,  that  the  net 
additional  1.87  acres  provided  to  United  Airlines  for 
,  employee    parking    is    apparently    important    to    United 

Airlines  since  United  Airlines  has  requested  the  additional 
land  from  the  Airport.  Therefore,  the  Budget  Analyst 
questions  why  the  Airport  does  not  require  United  Airlines 
to  pay  the  current  fair  market  value  for  the  additional  land 
that  United  will  receive  and  why  the  rent  being  charged  to 
United  Airlines  has  only  been  increased  by  an  average  of 
one  percent  annually  over  the  10-year  lease  extension 
period,  which  expires  on  June  30,  2003. 

4.  Ms.  Schimke  also  states  that  the  original  1973  lease  with 
United  Airlines  contains  no  provisions  for  annual 
adjustments  in  rent  during  the  initial  20-year  term  of  the 
lease,  or  during  each  of  the  subsequent  two  10-year 
extension  periods.  As  discussed  in  Comment  No.  3  above, 
the  existing  lease  provides  that  before  each  of  the  10-year 
extensions,  the  Airport  and  United  Airlines  will  negotiate  a 
revised  rent  based  upon  Airport  appraisals  of  the  land's  fair 
market  value  at  that  time. 

5.  In  response  to  the  Budget  Analyst's  report,  Ms.  Schimke 
advises  that  the  Airport  has  negotiated  the  proposed  lease 
Modification  No.  3  to  accommodate  the  Airport.  The  Airport 
went  to  United  Airlines  with  the  request  for  the  Airport  to 
take  back  from  United  Airlines  0.74  acres  of  property  to 
which  United  had  absolute  rights  under  its  long-term  lease, 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 


according  to  Ms.  Schimke.  The  Airport's  providing  of  up  to 
2.61  acres  of  Airport  property  to  United  Airlines,  which 
would  enable  United  Airlines  to  provide  its  employees  an 
additional  150  parking  spaces  at  the  same  rate  of  the 
existing  lease,  was  the  'price'  for  United  Airline's 
agreement  to  relinquish  the  0.74  acres  back  to  the  Airport, 
according  to  Ms.  Schimke.  Ms.  Schimke  states  that  the 
Airport  was  not  in  a  bargaining  position  to  demand  pricing 
concessions  from  United  as  part  of  this  deal.  Ms.  Schimke 
reiterates  that  the  0.74  acres  that  the  Airport  will  obtain 
from  United  Airlines  is  necessary  for  the  completion  of  the 
Airport's  Multi-Modal  Transportation  Center  and  AirTrain 
extension  (light  rail  system).  In  addition  to  the  important 
public  policy  goals  of  the  Multi-Modal  Transportation 
Center,  according  to  Ms.  Schimke,  the  Parking  Lot  DD 
portion  of  the  project  (see  Attachment)  has  significant 
revenue  implications.  Ms.  Schimke  anticipates  that  the 
expansion  of  Parking  Lot  DD  (the  expansion  will  initially 
be  used  for  Airport  employee  parking  and  Airport  tenant 
employee  parking,  and  eventually  for  public  long-term 
parking)  allowed  by  the  recapture  of  the  0.74  acres  from 
United  Airlines  will  generate  additional  parking  revenues 
to  the  Airport  conservatively  estimated  at  $1,017,600  for 
the  first  full  year  of  operation,  rising  to  approximately  $3 
million  per  year  when  the  lot  reaches  capacity.  Ms. 
Schimke  advises  that  these  parking  revenues  will  increase 
significantly  once  the  lot  converts  the  Airport  employee  and 
Airport  tenant  employee  parking  to  public  long-term 
parking  when  the  Multi-Modal  Transportation  Center  is 
completed. 

6.  Under  the  terms  of  the  lease,  not  until  the  current  10- 
year  lease  extension  expires  on  June  30,  2003  will  the 
Airport,  in  conjunction  with  the  Department  of  Real 
Estate,  appraise  the  value  of  the  land  and  negotiate  with 
United  Airlines  a  revised  rent  based  upon  the  land's  fair 
market  value  at  that  time,  as  of  July  1,  2003. 

7.  As  previously  noted,  in  1993,  under  the  first  10-year 
extension,  the  Airport  and  United  Airlines  negotiated  an 
adjusted  rent  for  this  first  10-year  extension,  effective  July 
1,  1993,  to  increase  the  annual  rent  by  $3,261.77,  from 
$32,617.73  per  acre  to  $35,879.50  per  acre  annually, 
effective  July  1,  1998.  This  one  and  only  rent  increase 
represents    an    average    increase    of    only    one    percent 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

9 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 

annually,  or  a  total  increase  of  10  percent  over  the  10-year 
lease  extension.  This  mid-term  adjustment  was  not 
intended  to  reflect  fair  market  value  at  mid-term,  according 
to  Ms.  Schimke.  While  the  Budget  Analyst  acknowledges 
that  the  1973  original  lease  contained  no  provisions  for 
annual  rent  adjustments,  nothing  precludes  the  Airport 
from  negotiating  a  rent  adjustment  at  this  time,  since  the 
Airport  is  requesting  approval  from  the  Board  of 
Supervisors  of  a  proposed  new  lease  Modification  No.  3, 
which  would  provide  United  Airlines  with  1.87  additional 
acres  of  Airport  property. 


Recommendations:      1.  Amend  the  proposed  resolution  to  provide  for  retroactive 
authorization,  in  accordance  with  Comment  No.  2  above. 

2.  Approval  of  the  proposed  resolution,  as  amended,  is  a 
policy  matter  for  the  Board  of  Supervisors  since  under  the 
proposed  lease  Modification  No.  3,  the  Airport  will  not 
receive  current  fair  market  value  until  July  1,  2003  and,  as 
the  lease  presently  states,  the  Airport  does  not  require 
United  Airlines  to  pay  annual  rent  adjustments  based  on 
annual  percentage  increases  in  the  Consumer  Price  Index 
(CPI)  over  the  entire  potential  40-year  term  of  this  lease. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

10 


Attachment 
Fa^e  1  ot  2 


AIRPORT  COMMISSION 

SAN  FRANCISCO  INTERNATIONAL  AIRPORT 

CITY  AND  COUNTY  OF  SAN  FRANCISCO 

INTEROFFICE  MEMORANDUM 


TO:  Harvey  Rose  DATE:  January  24, 2001 

Budget  Analyst 

FROM:  Bob  Rhoades     (C~* 

Deputy  Airport  Director,  Business 

SUBJECT:     Lot  DD  Development  -  MultiModal  Transportation  Center 


LotDD  consists  of  a  3,218  space  parking  garage  for  Airport  and  tenant  employees  under  Airport 
control.  It  also  contains  a  secure  1,190  space,  payed  parking  lot  under  long-term  lease  through 
year  2013  to  United  Airlines  ('UA")  for  UA  employee  parking.  Access  to  the  employee  parking 
garage  is  by  way  of  a  signalized  entry/exit  from  South  Airport  Boulevard.  Access  to  the  UA 
employee  parking  area  is  from  a  separate  signalized  entry/exit  from  South  Airport  Boulevard, 
with  an  additional  (stop  sign  controlled)  exit  onto  westbound  San  Bruno  Avenue.  Shuttle  buses 
transport  employees  to  and  from  other  Airport  destinations. 

The  Airport  intends  to  improve  Lot  DD  as  part  of  a  Multi -Modal  Transportation  Center 
("MMTC")  development.  Under  the  "Transit  First  Policy"  adopted  by  the  Airport  Commission 
in  1996,  the  Airport  is  cornmitted  to  the  development  of  a  ground  transportation  system  which 
gives  priority  to  alternate  transit  modes.  As  part  of  this  commitment,  the  development  of  the 
MMTC  at  Lot  DD  would  provide  a  consolidated  transportation  connection  for  long-term  airport 
parking,  buses,  and  bicyclists,  with  access  to  the  terminal  complex.  The  MMTC  would  achieve  a 
number  of  transit  first  objectives,  such  as:   1)  reduce  vehicular  travel  to  and  congestion  on  the 
passenger  terminal  roadways  by  providing  direct  access  Yia  AirTrain  for  remote  long-term 
parking  sites;  2)  encourage  use  of  public  transit  by  providing  a  direct  connection  between  a  new 
SamTrans  stop  and  AirTrain;  3)  encourage  bicycle  commuting  by  providing  an  extension  of  the 
Bay  Trail,  and  new  bicycle  parking  facilities  with  direct  access  to  the  terminal  complex  via 
AirTrain. 

Lot  DD  improvements  will  involve  an  extension  of  the  AirTrain  System  (the  Airport  light  rail 
system);  two  MMTC  AirTrain  Stations;  construction  of  a  link  of  the  San  Francisco  Bay  Trail; 
and  expansion  of  long-term  parking  facilities.  The  Lot  DD  improvements  are  broken  into  two 
phases  for  implementation. 

Phase  I  improvements  include:  paving  an  unimproved  portion  of  the  lot  to  add  approximately 
1,600  additional  parking  spaces  to  initially  be  used  by  employees;  signalization  improvements  at 
the  intersections  of  South  Airport  Boulevard  and  the  J-380  off  and  on-ramps;  construction  of  the 
Bay  Trail  link  through  Lot  DD;  and  relocation  of  the  parking  lot  exit  onto  San  Bruno  Avenue.  A 
contract  is  currently  underway  to  make  the  first  phase  improvements. 


11 


'■".'  Attachment 

'r'    ;.-     -.,  Vape   2   of    2 

Harvey  Rose 
January  24.  2001 
Page  2 

Phase  II  improvements  include:  the  extension  of  the  AirTrain  System;  constructiou  of  a  second 
parking  structure;  and  the  conversion  of  the  employee  parking  lot  and  structures  into  lonp-term 
parking  facilities. 

The  only  viable  vehicular  access  to  the  new  parking  area  being  developed  is  through  the  United 
Airlines'  secure  leasehold  area.  Without  such  access,  the  new  surface  parking  area  being 
developed  in  Phase  I  would  be  unusable,  making  less  long-term  parking  available  in  the  future. 
To  obtain  UA  agreement  to  bisect  their  leasehold  the  Airport  agreed  to  increase  the  UA 
leasehold  to  accommodate  150  additional  parking  spaces  and  to  retain  the  access  onto  Srin  Bruno 
Avenue  for  the  UA  employees. 

Phase  I  of  the  project  is  now  underway.  The  entire  MMTC,  including  phase  II  improvements,  is 
expected  to  be  complete  within  four  to  six  years. 


12 


Memo  to  Finance  and  Labor  Committee 

February  7,  2001  Finance  and  Labor  Committee  Meeting 

Item  3  -  File  01-0052 


Department: 
Item: 


Lessor: 

Lessee: 

Total  Acreage  and 
Cost  Per  Month 
Payable  by  United 
Airlines,  Inc.  to  the 
Airport: 


Purpose  of  Lease: 


Amount  Payable  by 
United  to  Airport: 


Airport  Commission 

Resolution  approving  a  new  lease  agreement  for  Plot  6 
between  United  Airlines,  Inc.  (United)  and  the  City  and 
County  of  San  Francisco,  acting  by  and  through  its 
Airport  Commission 

City  and  County  of  San  Francisco 

United  Airlines,  Inc. 


16.04  acres  at  a  monthly  rental  rate  of  $132,054.65  for  the 
first  and  second  years  of  the  proposed  lease 
(approximately  $8,232.83  per  acre  per  month).  For  the 
first  and  second  years,  annual  rent  would  total 
$1,584,655.76  ($98,794  per  acre  per  year). 

United  will  use  the  16.04  acres  for  an  air  cargo  facility, 
administrative  offices  and  employee  parking. 


$1,584,655.76  per  year  for  the  first  and  second  year  of  the 
lease.  According  to  Ms.  Dorothy  Schimke  of  the  Airport, 
rent  in  the  amount  of  $1,584,655.76  per  year  represents 
the  fair  market  value  of  the  subject  16.04  acres  on  June  1, 
1999,  the  retroactive  effective  date  of  the  proposed  lease. 
Presently,  United  pays  the  Airport  $508,353  under  permit 
for  19.35  acres  (see  Comment  No.  2).  The  proposed  lease 
provides  for  annual  increases  in  the  rent  based  on 
increases  in  the  Consumer  Price  Index  (CPI).  According  to 
the  proposed  lease,  the  CPI  adjustment  would  begin  on 
June  1,  2001.  As  stated  in  the  Attachment  provided  by 
the  Airport,  there  will  be  no  CPI  adjustment  between 
June  1,  1999  and  June  1,  2001.  In  the  sixth  year  of  the 
proposed  lease,  the  annual  rental  payment  to  the  Airport 
will  be  determined  by  a  City  reappraisal  of  the  land  to 
reestablish  the  fair  market  value  amount.  Subsequent 
annual  increases  in  the  rent  will  be  made  based  on 
increases  in  the  CPI  through  the  end  of  the  lease. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  and  Labor  Committee 

February  7,  2001  Finance  and  Labor  Committee  Meeting 


Term  of  Lease: 


Right  of  Renewal: 

Maintenance  and 
Operations: 


Description: 


Retroactive  to  June  1,  1999  to  June  30,  2011  (12  years 
and  one  month) 

Lessee  bas  no  renewal  rights. 


The  Lessee,  United  Airlines,  Inc.,  pays  for  the  costs  of  all 
maintenance  and  operations. 

The  proposed  resolution  would  authorize  a  new  12  year 
and  one  month  lease  retroactive  to  June  1,  1999  of  16.04 
acres  of  a  newly  configured  Plot  6  to  accommodate 
United's  air  cargo  facility,  some  administrative  offices  and 
employee  parking.  The  16.04  acres  of  a  newly  configured 
Plot  6  would  constitute  approximately  83  percent  of  the 
19.35  acres  of  Plots  5  and  6  covered  under  a  month-to- 
month  permit,  cancelable  on  30-day  notice,  since  the 
expiration  of  original  leases  in  1993.  According  to  Ms. 
Schimke,  United  occupied  the  16.04  acres  from  1993  until 
June  1,  1999  on  a  permit  basis,  instead  of  under  a  lease, 
pursuant  to  the  following  conditions  contained  in  a 
Memorandum  of  Understanding  negotiated  in  the  early 
1990s  between  the  Airport  and  United  Airlines: 

1)  Upon  termination  of  the  leases  of  Plots  5  and  6 
in  1993,  the  leases  would  be  replaced  in  the  interim 
by  month-to-month  permits,  for  the  same  areas  at 
the  same  land  rental  rates  as  were  then  in  effect, 
until  the  land  was  required  for  the  Airport's  Master 
Plan  construction  or  the  functions  were 
accommodated  elsewhere; 

2)  The  Airport  would  offer  United  a  "standard 
lease"  for  that  portion  of  the  site  primarily 
comprising  Plot  6,  for  continued  accommodation  of 
its  air  cargo  facility,  offices  and  related  parking; 

3)  Rent  under  the  interim  permit(s)  would  remain 
at  the  same  rate  as  was  in  effect  upon  termination 
of  the  Plots  5  and  6  leases,  and  would  be  adjusted 
to  fair  market  value  at  the  time  the  new  leases 
were  in  place. 


BOARD  OF  SUPERVISORS 
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Memo  to  Finance  and  Labor  Committee 

February  7,  2001  Finance  and  Labor  Committee  Meeting 

The-differeneesJbetween-the-proposed-lease-for-16T04-acres 

of  a  newly  configured  Plot  6  and  the  existing  month-to- 
month  permit  for  19.35  acres  of  Plots  5  and  6  are  (1)  the 
permit  is  cancelable  upon  30-days  notice,  (2)  the  new- 
lease  adjusts  the  rents  as  described  in  Comment  No.  2 
below,  (3)  1.43  acres  have  been  added  to  result  in  a  total 
acreage  of  16.04  acres  for  Plot  6,  which  originally  totaled 
14.61  acres,  and  (4)  Plot  6  has  been  slightly  reconfigured 
due  to  the  Airport's  Master  Plan  construction  program  for 
Boarding  Area  "G"  and  the  Air  Train  (Airport  Light  Rail 
System). 

The  proposed  lease  would  reflect  the  City's 
Administrative  Code  and  other  City  requirements,  such 
as  provisions  requiring  compliance  with  the  ban  on 
tropical  hardwoods  and  virgin  redwood,  the  MacBride 
Principles  related  to  employment  inequity  in  Northern 
Ireland,  the  Non-Discrimination  in  City  Contracts  and 
Equal  Benefits  Ordinance,  and  the  Minimum 
Compensation  Ordinance. 

Comments:  1.   The  Airport  Commission  adopted  Resolution  No.  00- 

0464  on  December  19,  2000,  recommending  the  proposed 
new  lease  to  United  retroactive  to  June  1,  1999.  As  shown 
in  the  Attachment,  the  lease  is  retroactive  to  June  1,  1999 
because  in  June  of  1999,  the  Airport  determined  that  the 
Air  Train  required  adjustments  that  would  encroach  upon 
the  eastern  boundary  of  the  new  Plot  6.  Finalization  of 
the  Plot  6  lease  was  therefore  put  off  until  the  Air  Train 
issues  were  settled  and  a  legal  description  of  the  premises 
could  be  accurately  determined.  Ms.  Schimke  reports  that 
because  these  adjustments  were  minimal,  United  agreed 
to  establishing  an  effective  date  of  June  1,  1999  for  the 
proposed  lease  at  the  then  market  value  rental  rate.  The 
final  configuration  of  the  parcel  incorporating  the  Air 
Train  land  recapture  was  not  defined  and  resolved 
between  the  Airport  and  United  until  November  of  2000. 

2.  According  to  Ms.  Schimke,  the  proposed  lease  of  16.04 
acres  includes  14.61  acres  of  the  old  Plot  6  and  1.43  acres 
of  the  old  Plot  5.  As  previously  noted,  the  annual  rent  for 
the  first  and  second  year  for  the  16.04  acres  would  be 
$1,584,655.76,  a  net  annual  increase  of  $1,076,302.76,  or 
an  increase  of  approximately  211.7  percent,  retroactive  to 
June  1,  1999,  from  the  permit  rent  of  $508,353  payable  by 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  and  Labor  Committee 

February  7,  2001  Finance  and  Labor  Committee  Meeting 


United  to  the  Airport  forthe-19.35  acres  of  PlotsS  and  6 
covered  under  permit.  The  new  proposed  lease  pertaining 
to  16.04  acres  would  result  in  a  reduction  of  3.31  acres 
being  leased  by  the  Airport  to  United.  Ms.  Schimke 
reports  that  upon  approval  of  the  proposed  lease  by  the 
Board  of  Supervisors,  United  would  pay  retroactively  to 
the  City  $1,793,838,  representing  the  difference  in  the 
monthly  rental  income  of  $89,691.90  for  the  20  month 
period  from  June  1,  1999,  the  start  of  the  proposed  lease, 
through  January  31,  2001.  The  net  increase  in  rent 
payable  by  United  to  the  Airport  for  the  first  two  years  of 
the  lease  is  calculated  as  follows: 


Approximate  Annual 
Cost  per  Acre 

Total  Acres 

Annual  Airport 
Revenues 

Old  permit:    Plot  5 

$42,000 

4.071 

$170,940 

Plot  6 

$22,082 

15.28 

$337,413 

Subtotal  for  permit 

19.35 

$508,353 

Proposed  new  lease  for 

new  Plot  6  (includes  a 
majority  of  the  acreage 
of  the  old  Plot  6  and  a 
small  parcel  of  the  old 
Plot  5) 

$98,794 

16.04 

$1,584,655.76 

$1,076,302.76 

3.  The  Budget  Analyst  notes  that  had  the  rent  amount 
for  the  second  year  of  the  proposed  lease  been  adjusted 
upward  according  to  the  3.77  percent  increase  in  the  CPI 
between  June  1,  1999  and  June  1,  2000,  the  rent  would 
have  increased  by  approximately  $59,742  to  an  annual 
rent  of  approximately  $1,644,398  instead  of  the  proposed 
annual  rent  of  $1,584,655.76  for  the  first  and  second  year 
of  the  proposed  lease. 

4.  Since  the  lease  began  on  June  1,  1999,  the  proposed 
resolution  should  be  amended  to  provide  for  retroactive 
authorization. 


1  Under  the  proposed  lease  for  the  new  Plot  6,  United  will  lease  1.43  acres  of  the  4.07  acres  of 
Plot  5  that  were  under  permit. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  and  Labor  Committee 

February  7,  2001  Finance  and  Labor  Committee  Meeting 

Recommendations:         1.   Amend     the     proposed     resolution     to     provide     for 

retroactive  authorization,  in  accordance  with  Comment 
No.  4  above. 

2.  Approval  of  the  proposed  resolution,  as  amended,  is  a 
policy  matter  for  the  Board  of  Supervisors  because  there 
will  be  no  CPI  adjustment  for  rent  for  the  second  year  of 
the  proposed  lease.  Had  the  rent  amount  being  charged  by 
the  Airport  to  United  Airlines  for  the  second  year  of  the 
proposed  lease  been  adjusted  upward  according  to  the 
increase  in  the  CPI,  the  rent  payable  by  United  to  the 
Airport  would  have  increased  by  approximately  $59,742 
to  an  annual  rent  of  $1,644,398,  instead  of  the  proposed 
annual  rent  of  $1,584,655.76  as  noted  in  Comment  No.  3. 


BOARD  OF  SUPERVISORS 

BUDGET  ANALYST 

i  -i 


Attachment 


AIRPORT  COMMISSION 

SAN  FRANCISCO  INTERNATIONAL  AIRPORT 

CITY  AND  COUNTY  OF  SAN  FRANCISCO 

MEMORANDUM 


TO:  Harvey  Rose  DATE:      January  25, 2001 

Budget  Analyst 

FROM:  BobRhoades  ftL, 

Deputy  Airport  Director,  Business 

SUBJECT:     Plot  6  Lease  -  United  Airlines 


As  discussed  in  the  Budget  Analyst's  report,  the  subject  lease  comprises  one  element  of  a 
complex  series  of  land  exchanges  required  to  implement  the  Airport's  Master  Plan.  The  general 
concept,  negotiated  in  the  early  1990's,  provided  for  existing  permits  to  remain  in  place,  at  then- 
current  rents,  until  the  land  was  required  for  the  Master  Plan  construction  or  the  functions  were 
accommodated  elsewhere.  It  was  generally  agreed  that  the  Plot  6  lease  would  not  be  finalized 
until  the  parcel  reached  its  final  configuration.  It  was  anticipated  thai  the  plot  would  reach  its 
final  configuration  when  the  Airport  recaptured  a  parking  parcel  in  the  area  now  comprising  a 
portion  of  the  new  Boarding  Area  G  apron. 

The  parking  parcel  was  surrendered  by  United  in  June  1 999;  however,  at  that  time  it  became 
apparent  that  the  Air  Train  (Airport  light  rail  system)  guideway  required  adjustments  that  would 
encroach  upon  the  eastern  boundary  of  Plot  6.  The  Plot  6  lease  could  not  be  absolutely  finalized 
until  the  guideway  issues  were  settled  and  legal  description  of  the  premises  could  be  written, 
based  upon  formal  survey.  The  issues  were  finally  resolved  in  late  2000. 

Because  the  guideway  adjustments  were  rninimal,  the  parties  agreed  that,  once  approved  by  the 
Board  of  Supervisors,  the  Plot  6  rent  commencement  would  be  retroactive  to  June  1,  1999.  The 
first  CPI  adjustment  will  occur  in  accordance  with  lease  provisions,  once  the  lease  is  actually  in 
place  (after  Board  approval).  The  Base  Index  for  CPI  adjustments  is  defined  as  "the  most  recent 
Consumer  Price  Index  published  immediately  prior  to  the  Commencement  Date,"  or  April  1999. 
The  Comparison  Index  for  the  first  (June  2001)  adjustment  will  be  April  2001 ,  generating  a  two- 
year  value  increase. 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 


Item  4 -File  01-0047 

Department: 

Item: 

Amount: 
Source  of  Funds: 

Term  of  Agreement: 
Description: 


Budget: 


Police  Department 

Resolution  authorizing  the  Chief  of  Police  to  execute  an 
agreement  with  the  State  of  California  in  the  amount  of 
$103,358  to  obtain  various  training  equipment. 

$103,358 

California  Commission  on  Peace  Officer  Standards  and 
Training  (POST) 

July  1,  2000  through  June  30,  2001  (see  Comment  No.  1) 

Currently,  the  California  Commission  on  Peace  Officer 
Standards  and  Training  (POST)  requires  all  California 
Peace  Officers  to  undergo  a  minimum  of  24  hours  of  in- 
service  training  every  two  years.  Effective  for  Fiscal  Year 
2000  -  2001,  POST  added  the  additional  requirement  that 
14  of  the  mandatory  24  hours  of  in-service  training  be  in 
particular  skills,  which  include  the  use  of  force,  vehicle 
operation,  and  arrest  and  control  skills  (i.e.,  the  ability  to 
physically  subdue  persons  under  arrest  who  are 
uncooperative).  In  order  to  enable  local  law  enforcement 
jurisdictions  to  meet  these  requirements,  POST  has  offered 
to  reimburse  23  law  enforcement  jurisdictions  (see 
Attachment  I)  throughout  California  for  the  acquisition  of 
the  necessary  training  equipment. 

The  subject  resolution  would  authorize  the  Chief  of  Police 
to  execute  an  agreement  with  the  California  Commission  on 
Peace  Officer  Standards  and  Training,  in  order  for  POST  to 
reimburse  the  Police  Department  $103,358  for  the  costs  of 
the  training  equipment  needed  by  the  Department  for  the 
State-required  training.  The  new  equipment  would  be 
utilized  at  the  Police  Academy. 

$103,358.  Attachment  II,  provided  by  the  Police 
Department,  contains  a  detailed  list  of  the  equipment  the 
Police  Department  would  acquire.  Attachment  III,  provided 
by  the  Police  Department,  contains  explanations  of  the 
equipment  to  be  acquired. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 


Comments: 


Recommendation: 


1.  The  proposed  agreement  states  that  the  term  of  the 
agreement  would  commence  on  July  1,  2000,  or  upon 
delivery  of  an  approved  copy  of  the  contract  to  POST. 
Captain  Dan  Lawson  of  the  Police  Department  states  that 
the  Police  Department  would  not  transmit  an  executed  copy 
of  the  proposed  agreement  to  POST  until  the  Police 
Department  has  obtained  approval  of  this  proposed 
resolution  from  the  Board  of  Supervisors. 

2.  The  proposed  agreement  contains  multiple 
indemnification  provisions.  Ms.  Margaret  Baumgartner  of 
the  City  Attorney's  Office  states  that  she  has  reviewed  the 
subject  proposed  agreement,  and  that  the  indemnification 
provisions  contained  therein  are  standard  and  pose  no 
unreasonable  risk  to  the  City. 

3.  According  to  Captain  Lawson,  after  entering  into  the 
proposed  agreement,  the  San  Francisco  Police  Academy 
would  be  designated  as  a  regional  California  Law 
Enforcement  Mini-Skills  Academy  by  POST.  The  Police 
Academy  would  then  provide  the  State-required  training  to 
its  own  uniformed  personnel  and  to  security  personnel  of 
other  jurisdictions,  such  as  UCSF  and  San  Francisco  State 
University,  if  sufficient  training  time  is  available. 
According  to  Captain  Lawson,  POST  would  fully  reimburse 
the  Police  Department  for  all  such  costs  the  Police 
Department  incurs  for  providing  the  State-required 
training. 

Approve  the  proposed  resolution. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Field  Training  Program 


Attachment    I 
■rage    1    of    2 


CA&FORNl&PQST^: 


home  /  srreuAP-  ~v, 


CONTACT; 

POST 

916.227.3909 
postmaster© 
oott.ca.qov 


POST  Regional  Skills  Training  ( 

Resource/Contact  Pa| 

October,  2000 


[SKILLS  CENTER                                     CONTACT 

\               CONTACT 

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LEDS  SIMULATOR 

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FOS  SIMULATOR 

l|PROJECT  MANAGER 

ALAMEDA  SD 

Teay  Godchsu 

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Lea  Moors 

|  Richard  Bond 

38-01 1-82AIS4FAAC 

925-551-5967 

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925-803-7129 

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CC/LCS  MEDANOS 

Bud  MirKwIth 

Oille  Sansen 

||Gra(cnen  Frecter 

98001 1-76  EIS  4  AMOS 

925-250-2635 

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925-439-2181x3273 

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ALAN  HANCOCK 

BUI  Steam  922-6965  3812 

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Greg  Oos9«y 

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95-011-90  AIS  4AMOS 

605-925-6674 

605-925-6574 

6874 

FRESNO  PD                          jJBill  Doaley 

Bill  Dooley 

[LL  Greg  Gamer 

96-011-53  EiS  4  ISIM 

559-498-1460 

(559-498-1450 

LOS  ANGELES  PO 

Bob  Reia 

Sgt.  Frank  Mica 

!|Capt.  RichWemmer 

98-011-78  FATS  &  AMOS 

813-532-3722 

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213-485-6524 

[310-342-3010 

LOS  ANGELES  SD 

George  Grain 

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Derek  Sill 

|Oave  Furmanski 

98-011-99  EIS  &FAAC 

309-629-9535 

323-881-3700 

[323-581-3700 

MODESTO  RSCJTC 

EdVloMSCSD 

Greg  Hausmann 

[Cflff  Harper 

98-011-59  AIS  4  AMOS 

209-525-4704 

209-525-4709 

1 209-525-4701 

ORANGE SD 

BobNaranJo 

Ken  Merrill 

TTjni  Flrmersn 

98-011-91  AIS  4  ISIM 

714-429-1870 

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714-535-0923 

l|  714-538-0923 

REDDING/BUTTE 

Ken  Benlly 

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Dan  Kupsky 

i|  Dr.  Leslie  Sue 

98-01 1-77  FATS  &  AMOS 

530-595-2405 

530-225-42B5 

1 530-895-2401 

RIVERSIDE  SD 

Jonn  Doyle 

Larry  Nering 

flLLRickHiggms 

98-011-92  AIS  4  ISIM 

909-466-2800 

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909-466-2800 

[909-485-2500 

SACRAMENTO  SD 

Sgt  Lane  Bartow 

|u  Lena  Maddux 

98-011-74  AIS 

916-B74-1956 

.[875-0021 

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Sot.  Mike  Smith 

Cpl  Mike  Camp 

jCapt.  Mary  Savage 

93-01 1-AMOS 

916-228-3859  p810-6696 

264-8282 

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SAN  BDNO  SD 

Gordon  Clemmer 

Gordon  Clemmer 

|Capl.  Greg  Kyritsis 

98-011-97  FATS  &  AMOS 

909-880-2622 

909-880-2622 

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Steve  Margetts 

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530-842-83H1 

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Nick  Beltagiia 

Greg  Wagstaff 

Li.  Dave  Babineau 

98-01 1-96  AIS  4  I8IM 

406-501-0960 

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Larry  Sllmnch 

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;[WEST  COVINAPD 
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Dennis  Mwcilack  |Tommy  Garcia 


[Ron  Gannon 


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Dennis  Dunne 


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408-270-6^58 


408-270-6458 


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Ron  Kirkpalrick 


Gary  Sokolcw 


707-464-4334 


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661-391.7500 


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l|ll  Henry  Parra 


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CepL  Dan  Lawion 


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Chucx  Deaklnj 


SgL  Tony  Levalino 


Sgt.  Tony  Levalino 


SELF-FUNDJOFAAC  _  ([714-246-8057 


Rodger  B.  Fluke,  POST  Webmaster 
Copyright  ©  2000  by  POST.  All  rlghu  reserved. 
Revised:  19  Oct  2000  14:04:59  -0700  . 


2or'2 


271/2001  121 1 


Attachment  II 


CONTRACTOR:      San  Francisco  Police  Department 
CONTRACTS:         00-011-36 


12 


EXHIBIT  D 
Equipment  Acquisition  and  Budget  Detail 


Phase  I 


A)       Acquisition  cf  the  fallowing  training  equipment: 


^Quantity 


.-..■-".:   •;'•':.■.- Itera'iH 


.    .'.         -  .  f: Equipment  ^;  •.";;--•-•    ": 

1  Skid  car  platform 


Laptop  computer  for  presentations  and  support 

a.  Primarily  for  the  Driving  Simulator  course; 

b.  Minimum  specs:  400  mh,  Pentium  2,  128  MB  RAM,  10  GB 
capacity  hard  drive,  CD  ROM  w/  DVD,  Active  Matrix  screen,  must 
be  compatible  w/LCD  projector 


Total: 

$40,000 


1 

Car  for  above  platform  (new  Ford  Crown  Victoria  -  same  make  as 
typical  patrol  car) 

$22,000 

3 

"Freddie"  life-size  training  mannequins,  plus  related  equipment  and 
supplies 

510,089 

3 

"Redman"  type  training  suits 

$3,000 

1 

1000  Lumen  or  better  LCD  projector,  RGB  Ac  Video 

$5,000 

$3,000 


20           Training  Handcuffs 

$1,700 

20           Straight  Batons  training  type 

$400 

20           Side-handle  Batons,  Training  Type 

$400 

Sufficient  floor  mats  to  facilitate  "Freddie"  Arrest  and  Control  Techniques 

$8,822 

Red  pistols,  knives,  shotguns 

$1,070 

Sub-Total 

$95,481 

TAX  (8.25%) 

$7877 

TOTAL 

S 103358 

*Jf there  are  remaining  funds,  Contractor  shall  obtain  approval  from  the  Regional  Skills 
Project  Coordinator,  Forrest  Billington,  (916)  227-4895,  to  purchase  other  peripheral  training 
items  as  needed 


Attachment    III 


Memorandum 


San  Francisco  Police  Department 


Captain  Daniel  Lawson,  #622 

To:  Captain  Daniel  Lawson,  Training  DivisiEftlicc  Academy^*  r ^ — B"^  D 

_ D  D 

From:  Lieutenant  Richard  Parry ,/T)ii5ln^Division n  Q 

Date:  Thursday,  February  01 ,  200 1 

Subject:  Equipment  Use  For  CPT  Program 


Issue: 

Listed  below  are  the  proposed  applications  for  the  equipment  being  purchased  under 
POST  contract  00-01 1-36  the  Perishable  Skills  Training  Program. 

Discussion: 

All  of  the  equipment  listed  in  the  attached  exhibit  "D"  will  be  utilized  in  this  weekly 
training  program  as  prescribed  by  POST.  The  skid  car  platform  and  Crown  Victoria 
patrol  vehicle  will  be  utili2ed  to  supplement  vehicle  operations  training  in  both  our  Basic 
and  our  Advanced  Courses.  The  remaining  listed  training  equipment  including 
handcuffs,  batons,  red  weapons,  floor  mats,  Freddies  and  Redman  suits  will  be  used  to 
support  the  POST  mandated  Arrest  and  Control  Techniques  training  and  evaluation 
portion  of  the  program. 

The  laptop  computer  and  LCD  projector  will  be  utilized  to  present  POST  power  point 
lesson  plans  in  the  Continuing  Professional  Training  Program. 

Recommendation: 

N/A 


20d 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 

Item  5  -  File  00-2187 

Note:     This  item  was  continued  by  the  Finance   Committee  at  its  meeting  of 
January  31,  2001. 


Department: 
Item: 


Contract  Term: 
Description: 


Department  of  Public  Health  (DPH) 

Resolution  authorizing  the  Director  of  Public  Health  and 
the  Purchaser  to  execute  a  contract  between  the  City  and 
County  of  San  Francisco  and  Health  Advocates,  LLP  to 
provide  uncompensated  care  recovery  services. 

March  1,  2001  through  December  31,  2002  (approximately 
22  months). 

Uncompensated  care  recovery  services  include  the 
assistance  to  complete  Supplemental  Security  Income 
(SSI)  and  Medi-Cal  eligibility  applications  on  behalf  of 
DPH  patients,  and  representation  and  legal  assistance  for 
patients  in  SSI  fair  hearings  and  appeals,  for  the  purpose 
of  collecting  unpaid  inpatient  hospital  bills  for  DPH 
services  that  are  provided  to  indigent  patients.  The 
proposed  resolution  would  authorize  DPH  to  enter  into  a 
contract  with  Health  Advocates,  LLP  (HA),  a  private 
contractor,  to  provide  an  uncompensated  care  recovery 
program. 

The  DPH  issued  a  Request  for  Proposals  (RFP)  in 
September  of  2000,  and  received  the  following  two  bids  in 
response  to  its  RFP:  (1)  Health  Advocates,  LLP  for 
$1,180,000  each  contract  year  and,  (2)  Paralign  for 
$1,090,000  each  contract  year.  Attachment  I,  provided  by 
Ms.  Monique  Zmuda  from  the  DPH,  indicates  that  the  bid 
amounts  were  based  on  estimated  annual  revenue  of 
$6,000,000,  which  has  since  been  reduced  to  $5,800,000. 
Ms.  Zmuda  further  advises  in  Attachment  I  that  HA 
reduced  its  bid  by  $90,000  to  $1,090,000  each  contract 
year,  the  same  amount  bid  by  Paralign,  after  negotiations 
with  the  DPH.  According  to  Ms.  Zmuda,  HA  was  selected 
based  on  the  DPH's  evaluation  of  the  established  criteria, 
which  awards  points  based  on  recent  relevant  experience, 
the  scope  of  work  to  be  performed,  the  quality  of  past 
projects  and  cost.  Ms.  Zmuda  states  that  the  DPH  also 
required  the  bidder  to  provide  these  services  by  multi- 
lingual and  multi-cultural  staff.  Ms.  Zmuda  further 
states  that  the  DPH  also  built  in  additional  services  into 
the  scope  of  work,  including  following  up  on  treatment 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 


authorization  requests,  and  incurring  the  cost  of  re-billing 
for  services  provided,  once  the  clients  have  been  made 
eligible  for  Medi-Cal. 

According  to  Ms.  Zmuda,  the  DPH  has  contracted  out 
uncompensated  care  recovery  services  since  1988  to  help 
supplement  in-house  efforts  on  uncompensated  care 
recovery  services.  Ms.  Zmuda  advises  that  San  Francisco 
General  Hospital  (SFGH)  has  an  internal  staff  of  ten 
Hospital  Eligibility  Workers  to  assist  SFGH  patients  in 
identifying  financial  resources  to  pay  for  inpatient 
hospitalization  for  which  no  source  of  funding  is  currently 
available.  Eligibility  determination,  which  is  provided  by 
DPH  personnel,  and  authorized  by  the  City's  Department 
of  Human  Services,  typically  includes  assistance  in 
applying  for  Medi-Cal  or  SSI,  and  making  appropriate 
third-party  claims.  The  contractor  will  handle  those  cases 
which  the  internal  DPH  eligibility  workers  have  deemed 
"unreimburseable,"  usually  involving  former  inpatients 
who  have  been  discharged  form  SFGH.  These 
uncompensated  care  services  include  identifying  financial 
resources  to  pay  for  the  care  provided,  field  work  on 
behalf  of  indigent  patients,  such  as  visits  to  homeless 
shelters;  assistance  in  obtaining  further  medical 
treatments  or  evaluations,  as  necessary;  efforts  to  locate 
former  inpatients  whose  addresses  are  not  known,  and 
patient  advocacy  and  representation  in  appealing  denials 
of  benefits  to  administrative  agencies. 

Based  on  a  prior  year  actual  recovery  from  contracting 
this  service,  Ms.  Zmuda  advises  that  the  DPH  was  paid 
approximately  $5,800,000  a  year,  or  approximately 
$483,333  a  month  from  making  indigent  patients  eligible 
for  third-party  payment.  The  DPH  anticipates  the  same 
level  of  annual  reimbursement  to  be  made  under  the 
proposed  contract  period. 

The  proposed  subject  contract  would  only  pay  the 
contractor  a  percentage  of  the  revenues  actually  collected, 
on  behalf  of  the  City,  according  to  the  following  schedule: 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 

Cumulative  Revenues  Generated  Contingency  Fees 

Each  Contract  Year  Paid  to  the  Contractor 

$0  to$1.999.999  NET  20  percent 

$2  million      to$2,999,999  NET  18  percent 

$3  million      and  above      NET  16  percent 

"NET'  is  used  to  describe  the  actual  cash  received  by 
SFGH  as  opposed  to  any  unique  program  determinations 
of  allowable  amounts  and  the  deduction  of  contractual 
allowances.  In  accordance  with  the  contract  provisions, 
HA  would  be  paid  a  varying  fee  by  the  DPH  based  on  the 
percentage  of  the  revenues  collected  by  the  contractor. 

Comments:  1.      As   indicated   above,    the   proposed  contract   would 

extend  for  the  22-month  period  from  March  1,  2001 
through  December  31,  2002.  According  to  Ms.  Zmuda, 
DPH  expects  to  realize  approximately  $10,633,333  in 
additional  revenues  under  this  22-month  contract,  with 
the  contractor  to  be  paid  an  estimated  $1,884,667,  or  an 
overall  average  of  17.72  percent  of  the  revenue  collected, 
for  net  estimated  revenues  to  the  City  of  $8,748,667  for 
the  term  of  the  22-month  contract.  Attachment  II, 
provided  by  DPH,  highlights  the  estimated  revenue  and 
contingency  fees  associated  with  the  subject  contract 
agreement.  As  mentioned  above,  the  actual  contingency 
fees  paid  to  HA  will  depend  on  the  revenue  realized 
during  the  contract  period. 

2.  The  proposed  subject  resolution  authorizes  the 
Director  of  Public  Health  and  the  Purchaser  to  make 
amendments  to  the  subject  contract,  if  needed.  According 
to  Ms.  Zmuda,  this  is  a  standard  provision  in  all  of  the 
DPH's  contracts,  which  allows  the  DPH  to  make  minor 
changes,  such  as  including  an  additional  scope  of  work 
requirement  or  extending  a  contract  for  a  few  months 
while  an  RFP  is  in  process,  but  not  change  the  intent  of 
the  original  contract. 

3.  On  January  31,  2000  the  Human  Rights  Commission 
(HRC)  issued  a  report  to  the  Finance  Committee 
pertaining  to  the  Department  of  Public  Health  (DPH) 
Request  for  Proposal  Process  #17-2000:  Uncompensated 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 

Care  Recovery  Services  (Attachment  III).  The  HRC 
concluded: 

"There  was  a  general  consensus  among  the  panelists  that 
Health  Advocates  submitted  a  superior  proposal.  In 
addition,  DPH  conducted  a  well  organized  and 
documented  RFP  process.  However,  ...  it  is  extremely 
important  to  avoid  even  the  appearance  of  bias  in  these 
procurements.  In  this  regard,  HRC  believes  that  there 
were  several  flaws  in  the  process. 

First,  none  of  the  panel  members  should  have  had  any 
recent  dealings  with  either  proposer.  Second,  the  partial 
reference  checks  of  only  one  proposer  should  not  have 
been  given  to  the  panelists.  If  reference  checks  were 
shared  with  the  panelists  at  all,  then  full  and  complete 
checks  for  both  the  panelists  should  have  been  included. 
Finally,  the  letter  of  recommendation  from  the  domestic 
partner  of  the  CFO  (of  the  DPH's  Community  Health 
Network)  should  not  have  been  included  in  Health 
Advocate's  proposal.  Whether  or  not  Health  Advocates 
knew  of  the  relationship,  the  sender  must  certainly  have 
been  aware  of  the  conflict  of  interest  and  should  have 
refrained. 

There  is  no  evidence  to  show  that  these  flaws  influenced 
the  outcome  of  the  evaluation  process  in  any  significant 
way.  However,  HRC  believes  that  the  most  equitable 
resolution  to  this  RFP  would  be  to  convene  another  panel 
to  reassess  the  two  previously  submitted  proposals, 
removing  the  letter  from  the  CFO's  domestic  partner  from 
that  of  Health  Advocates." 

4.  The  Budget  Analyst  requested  a  written  response  from 
Ms.  Zmuda  pertaining  to  the  HRC  report  dated  January 
31,  2000.  As  of  the  writing  of  this  report,  Ms.  Zmuda  has 
not  yet  responded  to  the  Budget  Analyst. 

Recommendation:  Approval  of  the  proposed  resolution  is  a  policy  matter  for 

the  Board  of  Supervisors. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


DEC-20-2000  14: IB   FROM  DPH-CFO 


City  and  County  of  San  Francisco 


Date: 

Memo  To: 

From: 
Re: 


to    mRUEY  rose       Attachment    I 

Department  of  Public  Health 

Mitchell  H.  Katz,  M.D. 
Director  of  Health 


December  20,  2000 

Harvey  Rose 
Budget  Analyst 

Monique  Zmuda  fH 
Chief  Financial  Officer 

Proposed  Contract  with  Health  Advocates,  LLP 


This  memo  is  in  response  to  questions  regarding  the  proposed  contract  with  Health 
Advocates  LLP,  to  provide  uncompensated  care  recovery  reimbursement  services  for  the 
Community  Health  Network  of  the  Department  of  Public  Health. 

The  following  summarizes  the  RFP  Process: 


Date  RFP  Issued: 
Selection  Made: 


September  29,  2000 
November  21,  2000 


Number  of  Bidders:     2-  Both  profit-making  private  firms 

Bid  Amounts:  Both  firms  were  requested  to  bid  on  services  for  revenue  recovery  of  $6 
million  annually.  Although  the  bid  from  Health  Advocates  was  590,000  higher  than  the 
other  qualified  bidder,  Health  Advocates  had  a  higher  score,  and  thus  was  awarded  the 
contract.  In  contact  negotiations  with  Health  Advocates,  the  Department  was  successful 
in  securing  a  reduction  equivalent  to  590,000  in  the  contract  rate  for  the  services. 


(415)  554-2600 


101  Grove  Street 


Fllininn  md  Path 

San  Francisco,  CA  94102 


DEC-20-2000      14: 18        FROM     DPH-CFQ 


TO     HftRUEY  ROSE  a  i-  •.        v 

Attachment  II 


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City  and  County  of  San  Francisco 


Willie  Lewis  Brown,  Jr. 
Mayor 


Attachment  III 

Human  Rights  Commission 

Contract  Compliance 

Dispute  Resolution/Fair  Housing 

Minority/Women/Local  Business  Enterprise 

Lesbian  Gay  Bisexual  Transgender  &  HIV  Discrimination 

Virginia  M.  Harmon 
Interim  Director 


MEMORANDUM 

Date:  January  31st,  2001 

To:  Honorable  Members  of  the  Finance  Committee 

Through:        Virginia  Harmon 

Interim  Director,  HRC 

From:  Diana  Rathbone 

Senior  Contract  Compliance  Officer,  HRC 

Subject:  Department  of  Public  Health  (DPH)  Request  for  Proposal  #  17-2000: 

Uncompensated  Care  Recovery  Services 


At  its  regular  meeting  on  January  17th,  2001,  the  Finance  Committee  of  the  Board  of  Supervisors 
asked  the  Human  Rights  Commission  to  look  into  the  selection  process  for  the  above  referenced 
contract  and  to  ensure  its  impartiality. 

This  report  is  a  response  to  that  request.  It  includes  a  brief  contract  history,  followed  by  a 
summary  of  normal  selection  procedures  for  professional  services  contracts.  These  procedures 
are  then  compared  with  those  on  this  contract,  with  special  reference  to  potential  problem  areas 
raised  at  the  Finance  Committee  meeting. 

BACKGROUND 

In  September,  2000,  DPH  issued  a  Request  for  Proposals  (RFP)  for  uncompensated  care 
recovery  services.  The  purpose  of  this  RFP  was  to  hire  a  contractor  to  assist  DPH  in  collecting 
unpaid  inpatient  hospital  bills  for  services  that  are  provided  to  indigent  patients.  Such  services 
include,  for  example,  completing  Supplemental  Security  Income  (SSI)  and  Medi-Cal  eligibility 
applications  on  behalf  of  patients,  and  representing  them  at  SSI  fair  hearings  and  appeals. 

Two  proposals  were  received  in  response  to  the  RFP,  one  from  the  incumbent,  Paralign,  and  the 
other  from  a  new  contractor  called  Health  Advocates. 

The  proposals  were  rated  by  an  expert  panel  and  Health  Advocates  received  the  highest  score. 
When  Paralign  was  notified  that  it  had  not  been  selected,  it  filed  an  appeal  with  DPH,  which 
DPH  overruled.  The  Health  Commission  then  voted  to  award  the  contract  to  Health  Advocates 
at  its  meeting  on  December  12th,  2000  and,  because  the  contract  involves  incoming  revenues  to 


25  Van  Ness  Avenue 

Suite  800 

San  Francisco 

California  94102-6033 


TEL  (415)  252-2500 

FAX  (415)  431-5764 

TDD  (415)  252-2550 

http://www.sfhumanrights.org 


& 


Attachment  III 
Page  2   of  6 


Finance  Committee,  Board  of  Supervisors 
January  31"\  2001 


the  City  in  excess  of  $1  million,  it  was  forwarded  to  the  Board  of  Supervisors  Finance 
Committee  for  its  approval. 

Paralign  has  filed  an  application  for  a  temporary  restraining  order  and  a  motion  for  a  preliminary 
injunction  in  the  United  States  District  Court  for  Northern  California.  The  court  has  agreed  to 
continue  the  date  of  this  motion  until  the  Board  of  Supervisors  awards  the  contract. 

CONTRACT  SELECTION  PROCEDURES 

The  City  has  two  distinct  processes  for  the  selection  of  contractors.  They  are  variously  described 
in  Chapters  6  and  12D.A  of  the  San  Francisco  Administrative  Code. 

Construction  Contracts.  Construction  contracts  are  put  out  to  bid  and  the  contract  is  awarded 
to  the  lowest  responsible  and  responsive  bidder. 

Professional  Services  Contracts.  Professional  services  contracts  are  awarded  using  an  RFP 
process.  The  aim  of  the  RFP  is  to  select  the  company  which  will  provide  the  highest  level  of 
service  (i.e.,  which  proposer  will  design  the  most  beautiful  and  functional  hospital;  which 
proposer  will  provide  accounting  services  in  the  most  efficient  and  timely  manner;  which 
proposer  will  create  the  most  user  friendly  and  reliable  computer  software  program). 

On  many  professional  services  contracts,  particularly,  architecture  and  engineering  contracts,  the 
quality  of  the  work  being  proposed  is  the  over-riding  factor  and,  in  those  cases,  fees  are 
submitted,  if  they  are  submitted  at  all,  in  a  separate,  sealed  envelope.  In  this  way,  the  department 
has  a  starting  point  for  cost  negotiations  with  the  successful  contractor,  but  the  panel  is  not 
influenced  by  questions  of  money. 

On  other  contracts,  as  in  the  one  before  you,  price  may  be  an  issue,  and  in  these  cases,  it  will  be 
evaluated  along  with  all  other  aspects  of  the  proposal.  However,  price  will  never  be  the 
determining  factor.  If  it  were  the  determining  factor,  there  would  be  no  need  to  issue  an  RFP  and 
the  contract  would  be  awarded  to  the  lowest  bidder,  as  if  it  were  a  construction  contract. 

Although  every  effort  is  made  to  keep  the  RFP  process  as  objective  as  possible,  it  is,  compared 
to  the  bidding  process  used  for  construction  contracts,  a  more  subjective  approach.  Therefore, 
every  effort  has  to  be  made  to  document  and  to  ensure  the  fairness  of  the  selection  procedures  at 
each  stage  of  the  process,  and  to  eliminate  any  possible  suggestion  of  bias. 


A  TYPICAL  SELECTION  PROCESS. 

RFP.  The  first  step  is  for  the  department  to  issue  an  RFP.  It  should  spell  out  exactly  what  the 
department  is  looking  for,  including  clearly  defined  minimum  qualifications  and  the  types  of 
information  that  should  be  included  in  the  proposal.  The  RFP  should  also  contain  specific 
evaluation  criteria,  with  predetermined  points  assigned  to  each  criteria,  so  that  proposers  will 
understand  how  they  are  going  to  be  scored. 


OS 


Attachment  III 
^age  j  ot  fa 


Finance  Committee,  Board  of  Supervisors 
January  31",  2001 


On  a  typical  contract,  if  points  are  assigned  to  the  price,  these  points  will  be  assessed  using  a 
predetermined  formula  based  on  the  lowest  price. 

Preproposal  Meeting  and  Questions.  A  pre-proposal  meeting  is  held  to  answer  the  questions 
of  potential  proposers.  Minutes  are  taken  and  are  then  distributed  to  all  potential  proposers,  both 
those  present  at  the  meeting  and  those  who  have  expressed  interest  in  the  RFP  but  who  are  not  at 
the  meeting.  In  addition,  answers  to  any  phone  questions  provided  by  the  department  to  any 
interested  proposer  are  provided  by  mail  to  all  interested  proposers. 

Panel.  The  department  selects  a  panel,  normally  composed  of  three  or  more  members,  to 
evaluate  the  proposals.  Panelists  must  possess  appropriate  expertise  to  evaluate  the  contract  in 
question  and  the  panel  as  a  whole  must  reflect  the  ethnic  and  gender  diversity  of  San  Francisco. 
HRC  strongly  recommends  that  at  least  one  panel  member  be  recruited  from  outside  the 
department,  and  one  from  outside  the  City,  to  ensure  impartiality.  However,  this  is  not  a 
requirement. 

No  panel  members  should  be  involved  in  the  preparation  of  the  RFP  in  question,  or  in  the 
planned  future  management  of  the  contract.  Additionally,  no  panel  members  should  have  a 
previous  professional  or  personal  relationship  with  any  of  the  proposers. 

Panel  Orientation.  The  panel  will  normally  receive  an  orientation  prior  to  commencing  its 
work.  The  point  of  the  orientation  is  to  answer  any  questions  the  panelists  may  have,  and  to 
provide  rules  to  ensure  an  equitable  process.  For  example,  it  is  inappropriate  for  any  panel 
member  to  attempt  to  influence  the  score  of  another  panel  member,  to  indicate  by  body  language 
during  an  oral  interview  an  opinion  of  the  presentation  in  progress,  to  score  a  written  proposal  on 
anything  other  than  the  information  contained  within  the  proposal,  or  to  give  an  oral  interview  of 
one  hour,  with  one  set  of  questions,  to  one  proposer,  and  ten  minutes,  with  a  completely  different 
set  of  questions,  to  another. 

Scoring  Written  Proposals. 

Once  the  proposals  have  been  received,  a  copy  of  each  one  is  sent  to  the  panelists,  after  which,  a 
meeting  is  normally  convened  to  score  the  written  proposals.  The  HRC's  Rules  and  Regulations, 
pursuant  to  Chapter  12.D.A  of  the  San  Francisco  Administrative  Code  (the  Minority,  Woman 
and  Locally  Owned  Business  (M/W/LBE)  Ordinance)  encourage  departments  to  prohibit  any 
discussion  at  all  among  panelists,  other  than  for  points  of  clarification  and  follow  up,  allowing 
each  panelist  to  score  each  proposal  and  interview  according  to  his  or  her  individual  assessment. 
However,  this  is  not  a  requirement. 

Oral  Interviews. 

Once  the  proposals  have  been  evaluated,  the  department  usually  creates  a  shortlist  of  the  top 
scorers,  and  these  firms  are  then  invited  to  an  oral  interview  in  front  of  the  same  panelists.  All 
proposers  should  be  asked  the  same  questions,  each  interview  should  be  scored  according  to 


Attachment  III 
Page  A  of  6 


Finance  Committee,  Board  of  Supervisors 
January  31 ",  2001 


predetermined  evaluation  criteria  and  points  and  all  interviews  should  take  the  same  amount  of 
time.  Again,  HRC  discourages  discussion  among  the  panelists,  other  than  for  points  of 
clarification  and  follow  up,  but  this  is  not  a  requirement. 

Negotiations  and  Contract  Award. 

At  the  conclusion  of  the  selection  process,  the  department  enters  into  discussions  with  the  firm 
which  submitted  the  highest  rated  proposal.  At  this  point,  everything  in  the  proposal,  including 
the  price,  is  open  to  negotiation. 

Once  those  negotiations  are  successfully  completed,  the  contract  is  ready  for  award.  If  the 
negotiations  break  down,  the  department  will  open  negotiations  with  the  second  highest  scorer, 
and  so  on,  until  it  has  a  successful  contractor. 

QUESTIONS  ABOUT  THE  PROCESS  USED  IN  THIS  RFP 

General. 

DPH,  for  the  most  part,  followed  the  procedures  outlined  above.  It  is  perhaps  worth  noting  that, 
during  the  evaluation  of  the  written  proposals,  the  panel  was  allowed  to  discuss  the  responses  to 
each  of  the  evaluation  criteria,  prior  to  scoring  that  criteria  according  to  the  predetermined 
points.  Notes  were  kept  of  these  discussions,  and  these  were  later  typed  up  and  sent  to  each 
panel  member  for  review.  While  HRC  prefers  that  no  discussion  take  place,  such  a  practice  is 
not  prohibited,  and  there  is  nothing  in  either  the  notes  or  the  scores  to  suggest  anything  other 
than  a  fair,  thoughtful  and  unbiased  evaluation.  To  the  contrary,  panel  members  report  that  it 
was  an  extremely  formal  selection  process. 

It  is  DPH's  practice  to  assign  the  selection  process  to  a  contract  administrator.  The  contract 
manager,  the  person  who  will  be  in  charge  of  the  contract  once  it  is  awarded,  is  not  involved  in 
the  development  of  the  RFP  other  than  to  advise  on  the  selection  of  panel  members  and  to  be 
present  at  the  panel  evaluations  to  answer  technical  questions. 

DPH  decided  not  to  conduct  oral  interviews. 

References.    Paralign's  proposal  included  very  few  letters  of  recommendation,  in  comparison 
with  that  of  Health  Advocates.  During  the  panel  evaluation  of  the  written  proposals,  the 
contract  manager  asked  the  contract  administrator  if  she  could  share  the  results  of  Paralign's 
reference  checks  in  an  effort  to  bolster  the  information  in  Paralign's  proposal.  Permission  was 
granted.  At  that  point,  the  contract  manager  had  not  completed  Paralign's  reference  checks,  and 
had  not  started  on  those  of  Health  Advocates. 

The  Paralign  references  were  mixed,  certainly  more  mixed  than  any  letter  a  proposer  would  opt 
to  include  in  a  proposal.  On  the  other  hand,  all  but  one  of  the  panel  members,  although  they 
remember  the  incident,  do  not  feel  that  it  effected  their  scoring  one  way  or  the  other.  They  were 


Attachment  III 
Page  iot  b 


Finance  Committee,  Board  of  Supervisors 
January  31",  2001 


more  influenced  by  the  proposal  itself.  The  other  panel  member  felt  it  had  increased  an  already 
negative  assessment  of  Paralign's  performance  under  this  criteria. 

No  information  was  given  to  the  panel  regarding  the  outcome  of  Health  Advocate's  references, 
because  they  had  not  yet  been  checked. 

Bias. 

It  is  obviously  extremely  important  that  no  panelists  and  no  department  staff  involved  in  the  RFP 
process  should  have  any  investment  in  its  outcome  that  could  bias  the  proceedings.  For  example, 
it  is  important  in  a  contract  such  as  this  one  that  none  of  the  panelists  should  have  previously 
worked  with  the  incumbent.  However,  two  of  the  five  panelists  have  had  ongoing  professional 
dealings  with  the  incumbent  in  the  performance  of  its  current  contract. 

In  addition,  the  contract  manager,  as  well  as  her  supervisor,  the  Chief  Financial  Officer  (CFO)  of 
DPH's  Community  Health  network,  had  an  existing  relationship  with  one  or  other  of  the 
proposers.  The  CFO's  domestic  partner  used  to  work  for  Health  Advocates,  and  her  letter  of 
recommendation  was  one  of  those  included  in  Health  Advocate's  proposal.  The  CFO  is  also 
close  friends  with  several  Paralign  employees.  For  these  reasons,  when  he  was  asked  to  serve  on 
the  panel,  the  CFO  recused  himself.  However,  as  the  contract  manager's  supervisor,  it  was  also 
his  job  to  review  and  sign  off  on  all  the  RFP  documents  once  the  process  was  complete,  the 
highest  scorer  determined  and  the  letters  of  notification  ready  to  be  issued.  The  CFO  did  not 
recuse  himself  from  this  task  and  signed  the  document. 

It  seems  clear  that  the  CFO,  in  order  to  avoid  even  the  appearance  of  bias,  should  have  recused 
himself  from  the  entire  process,  including  lending  his  signature  to  the  final  RFP  approval. 
However,  because  his  role  was  so  minor,  and  occurred  post  selection,  it  seems  clear  that  his 
signature  could  not  have  influenced  the  outcome  of  the  process  itself.  Additionally,  none  of  the 
panel  members  knew  the  name  of  the  CFO's  domestic  partner,  and  therefore  could  not  have  been 
influenced  by  the  presence  of  this  letter  in  Health  Advocate's  proposal. 

The  contract  manager  is  the  second  person  with  an  apparent  conflict  of  interest.  She  was  hired  in 
July,  2000,  two  months  before  this  RFP  was  issued,  and  part  of  her  assignment  was  to  work  with 
the  incumbent  in  the  execution  of  its  current  contract.  In  addition,  in  a  previous  employment, 
she  had  hired  Health  Advocates  to  perform  similar  services  to  those  requested  in  this  RFP. 
Lastly,  although  she  was  not  on  the  panel,  she  selected  all  but  one  of  the  panel  members  and  she 
was  present  while  the  proposals  were  being  scored  as  a  technical  advisor.  It  was  in  this  role  that 
she  shared  the  partial  references  with  the  panel  members. 

The  panel  members  say  that  the  contract  administrator  played  the  most  important  role  during 
their  deliberations,  giving  them  all  of  their  instructions.  They  agree  that  the  contract  manager  sat 
silently,  apart  from  reading  the  references  and  answering  one  or  two  questions.  There  is 
therefore  no  evidence,  except  for  reading  the  references,  that  she  influenced  their  discussions  in 
any  way. 


Attachment    III 
Page   6    of    6 


Finance  Committee,  Board  of  Supervisors 
January  31",  2001 


Bilingual  Staff.  This  is  not  really  an  issue  of  procedure.  The  RFP  required  as  a  minimum 
qualification  that  proposers  must  be  able  to  "demonstrate  that  they  have  adequate  staff  "on 
board"  as  of  the  time  of  its  bid,  who  are  bilingual,"  that  they  have  access  to  interpreters,  and  that 
"both  on  and  off  site  staff  demographics  reflect  the  ethnically  diverse  patient  population  served 
by  DPH."    Panel  members  and  DPH  staff  are  satisfied  that  both  proposals  met  these 
requirements.  After  reviewing  the  proposals,  HRC  concurs  with  this  opinion. 

Price  Negotiations.  It  was  entirely  normal  and  acceptable  procedure  for  DPH  to  include  the 
price  submitted  with  the  proposal  in  its  negotiations  with  Health  Advocates. 
At  that  point  Paralign,  because  it  had  a  lower  score,  was,  out  of  the  picture,  and  had  been  notified 
in  writing  to  that  effect.  It  would  have  been  highly  unfair  to  allow  Paralign  to  modify  its 
proposal  in  any  way  after  the  completion  of  a  selection  process  in  which  it  was  the  loser,  with  the 
idea  of  allowing  it  to  get  back  into  the  competition.  Only  if  negotiations  were  unsuccessful  with 
the  highest  scorer  could  DPH  have  entered  into  negotiations  with  Paralign. 

CONCLUSION 

There  was  general  consensus  among  the  panelists  that  Health  Advocates  submitted  a  superior 
proposal;  In  addition,  DPH  conducted  a  well  organized  and  documented  RFP  process. 
However,  as  mentioned  above,  it  is  extremely  important  to  avoid  even  the  appearance  of  bias  in 
these  procurements.  In  this  regard,  HRC  believes  that  there  were  several  flaws  in  the  process. 

First,  none  of  the  panel  members  should  have  had  any  recent  dealings  with  either  proposer. 
Second,  the  partial  reference  checks  of  only  one  proposer  should  not  have  been  given  to  the 
panelists.  If  reference  checks  were  shared  with  the  panelists  at  all,  then  full  and  complete  checks 
for  both  the  panelists  should  have  been  included.  Finally,  the  letter  of  recommendation  from  the 
domestic  partner  of  the  CFO  should  not  have  been  included  in  Health  Advocate's  proposal. 
Whether  or  not  Health  Advocates  knew  of  the  relationship,  the  sender  must  certainly  have  been 
aware  of  the  conflict  of  interest  and  should  have  refrained. 

There  is  no  evidence  to  show  that  these  flaws  influenced  the  outcome  of  the  evaluation  process 
in  any  significant  way.  However,  HRC  believes  that  the  most  equitable  resolution  to  this  RFP 
would  be  to  convene  another  panel  to  reassess  the  two  previously  submitted  proposals,  removing 
the  letter  from  the  CFO's  domestic  partner  from  that  of  Health  Advocates. 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 

Item  6  -  File  01-0112 


Departments: 


Item: 


Amount: 


Human  Resources  Department  (HRD) 
Fire  Department 
Police  Department 
Department  of  Public  Health  (DPH) 
Department  of  Human  Services  (DHS) 
Sheriffs  Department 
Department  of  Parking  and  Traffic  (DPT) 
Recreation  and  Park  Department  (RPD) 
Juvenile  Probation  Department 

Hearing  to  consider  the  release  of  reserved  funds  for  the 
following  departments  to  fund  workers'  compensation 
expenses  in  FY  2000-2001. 

$9,410,038,  as  follows: 


Department 

Amount 

Department  of  Public  Health  (DPH) 

Community  Health  Network 

$2,309,684 

Population  Health 

363.417 

Subtotal  Public  Health 

$2,673,101 

Fire  Department 

2,122,174 

Police  Department 

2,000,109 

Department  of  Parking  and  Traffic  (DPT) 

724,685 

Recreation  and  Park  Department  (RPD) 

617,820 

Sheriffs  Department 

501,096 

Department  of  Human  Services  (DHS) 

476,335 

Juvenile  Probation  Department 

294,718 

t  Total  Requested  Release  of  Reserves 

$9,410,038 

Source  of  Funds: 


Description: 


FY  2000-2001  General  Fund  Budget 
for  each  department  listed  above 

During  the  FY  2000-2001  budget  hearings,  the  Finance 
and  Labor  Committee  recommended  that  approximately 
one  third  of  annual  workers'  compensation  expenditure 
budgets  for  the  eight  City  departments  listed  in  the  table 
above  be  placed  on  reserve  so  that  the  Committee  could 
monitor  workers'  compensation  spending  during  the  fiscal 
year.  The  table  shown  below  contains,  for  each  of  the 
eight  departments,  the  FY  2000-2001  budgeted  amount 
for    workers'    compensation,     the     actual    expenditures 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 


through  December  31,  2000,  the  projected  expenditures 
through  June  30,  2001,  and  the  projected  surplus  or 
deficit  in  spending  for  workers'  compensation  spending  for 
FY  2000-2001. 


Departmental  General  Fund  Expenditures  for  Workers'  Compensation 
through  December  31,  2000* 

Department 

FY  2000- 
2001  Budget 

Actual 

Expenditures 

through 

12/31/00 

%of 
Annual 
Budget 

Projected 

Expenditures 

through  June 

30,  2001 

Projected 
Surplus 
(Deficit) 

Public  Health 

Community 
Health  Network 

$6,929,055 

$3,081,843 

44.5% 

$6,225,323 

$703,732 

Population  Health 

1,090,252 

327,044 

30.0% 

660,629 

429,623 

Subtotal 

$8,019,307 

$3,408,887 

42.5% 

$6,885,952 

$1,133,355 

Fire  Department 

6,416,523 

3,017,575 

47.0% 

6,095,501 

321,022 

Police  Department 

6,375,329 

3,309,274 

51.9% 

6,684,734 

(309,405) 

Recreation  and  Park 

1,937,923 

1,020,688 

52.7% 

2,061,790 

(123,867) 

Parking  and  Traffic 

2,174,055 

1,021,149 

47.0% 

2,062,722 

111,333 

Sheriffs  Department 

1,394,400 

1,046,235 

75.0% 

1,727,515 

(333,115) 

Human  Services 

1,459,006 

803,826 

55.1% 

1,623,728 

(164,722) 

Juvenile  Probation 

884,155 

281,724 

31.9% 

569,082 

315,073 

Total 

$28,660,698 

$13,909,358 

48.5% 

$27,711,024 

5949,674 

*Actual  expenditures  from  July  1,  2000  through 
December  31,  2000,  totaling  $13,909,358,  were  provided 
by  the  Workers'  Compensation  Division  of  the 
Department  of  Human  Resources  (HRD),  as  shown  in 
Attachment  I.  Also  provided  by  HRD,  Attachment  II 
contains  projected  expenditures  for  FY  2000-2001  for  all 
General  Fund  and  General-Fund  supported  departments, 
totaling  $48,523,011,  including  $27,711,024  for  the  eight 
departments  listed  above. 

According  to  HRD  projections,  the  above  table  indicates 
that  the  Public  Health  Department,  the  Fire  Department, 
the  Department  of  Parking  and  Traffic  and  the  Juvenile 
Probation  Department  are  all  spending  within  their 
previously  approved  FY  2000-2001  budget  for  worker 


compensation. 

While  the  Police  Department,  the  Recreation  and  Park 
Department  and  the  Department  of  Human  Services  are 
projected  to  end  FY  2000-2001  with  deficits  in  workers' 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

34 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 


compensation,  these  three  departments  expect  to  cover 
such  projected  deficits  using  existing  budgeted  funds  from 
other  accounts  in  the  departments'  previously  approved 
FY  2000-2001  budgets,  and  therefore,  do  not  expect 
requesting  supplemental  appropriations  for  workers' 
compensation  in  FY  2000-2001,  according  to  Captain  John 
Goldberg  of  the  Police  Department,  Ms.  Mary  King  Gorky 
of  the  Recreation  and  Park  Department  and  Ms.  Sally 
Kipper  of  the  Department  of  Human  Services. 

The  Sheriffs  Department,  however,  which  is  also  expected 
to  end  FY  2000-2001  with  a  deficit  in  workers' 
compensation,  will  most  likely  require  a  supplemental 
appropriation  to  fund  the  department's  estimated  deficit 
of  $333,115  for  FY  2000-2001,  as  discussed  in  detail 
below. 

Sheriffs  Department 

As  of  December  31,  2000,  the  Sheriffs  Department  had 
already  expended  $1,046,235,  or  75.0  percent,  of  its  total 
FY  2000-2001  workers'  compensation  budget  of 
$1,394,400  and  117.1  percent  of  its  available,  unreserved 
workers'  compensation  funding  of  $893,304  ($1,394,400 
budgeted  less  reserve  of  $501,096).  Based  on  workers' 
compensation  expenditures  incurred  during  the  first  six 
months  of  Fiscal  Year  2000-01,  the  Sheriffs  Department 
is  projected  by  the  Department  of  Human  Resources  to 
spend  an  estimated  total  of  $1,727,515  on  workers' 
compensation  costs  during  FY  2000-2001,  as  shown  in  the 
table  above  and  in  Attachment  II,  which  is  23.9  percent  or 
$333,115  more  than  the  Department's  total  FY  2000-2001 
workers'  compensation  appropriation  of  $1, 394,400. * 

The  Sheriffs  Department  attributes  high  workers' 
compensation  spending  through  the  first  six  months  of  FY 
2000-2001  (through  December  31,  2000)  to  one 
extraordinary  claim  that  was  paid  in  November  of  2000, 
which  totaled  $385,880,  as  stated  in  Attachment  III, 
provided  by  the  Sheriffs  Department.  Without  this  one 
extraordinary  claim,  the  Sheriffs  Department  would  have 


1  Attachment  III,  provided  by  the  Sheriffs  Department,  contains  a  FY  2000-2001  projection  for  total 
expenditures  for  workers'  compensation  of  $1,708,144,  which  is  $19,371  less  than  HRD's  projection  of 
$1,727,515.  Ms.  Jean  Mariani  of  the  Sheriffs  Department  concurs  with  HRD's  projections. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 


Comments: 


Recommendation: 


been  within  its  workers'  compensation  budget  for  FY 
2000-2001,  having  expended  $660,133  (expenditures  of 
$1,046,235  less  the  claim  of  $385,880)  as  of  December  31, 
2000,  or  47.3  percent  of  its  total  workers'  compensation 
appropriation  of  $1,394,400. 

1.  It  is  therefore  likely  that  the  Sheriffs  Department  will 
require  a  supplemental  appropriation  for  workers' 
compensation  in  FY  2000-2001  in  the  amount  of 
approximately  $333,115. 

2.  In  addition,  at  the  December  20,  2000  Finance  and 
Labor  Committee  hearing  on  overtime  expenditures  in  the 
Sheriffs  Department,  the  Budget  Analyst  reported  that 
the  Sheriffs  Department  would  likely  require  a 
supplemental  appropriation  in  FY  2000-2001  of  at  least 
$1,911,919  for  Salaries  and  Fringe  Benefits,  including  a 
projected  deficit  in  overtime  funds  of  $1,759,730.  The 
projected  deficit  of  $333,115  for  workers'  compensation 
plus  the  Budget  Analyst's  previously  projected  deficit  of 
$1,911,919  for  Salaries  and  Fringe  Benefits,  including 
overtime,  is  likely  to  result  in  a  total  estimated 
supplemental  appropriation  for  the  Sheriffs  Department 
in  FY  2000-2001  of  $2,245,034. 

3.  According  to  Mr.  Minh  Vu,  Deputy  Director  of  the 
Workers  Compensation  Divison  at  HRD,  and  as  shown  in 
Attachment  II  provided  by  HRD,  total  workers' 
compensation  expenditures  for  FY  2000-2001  for  all  City 
departments  are  projected  to  be  $54,823,445,  or 
$1,416,355  less  than  the  total  FY  2000-2001  City  budget 
for  workers'  compensation  of  $56,239,800  previously 
approved  by  the  Board  of  Supervisors,  including 
$49,021,543  budgeted  for  General  Fund  and  General 
Fund  supported  departments.  Also,  as  shown  in 
Attachment  II,  total  workers'  compensation  costs  for 
General  Fund  and  General  Fund  supported  departments 
for  FY  2000-2001  are  projected  to  be  $48,523,011,  or 
$498,532  less  than  the  total  FY  2000-2001  budget  of 
$49,021,543  previously  approved  by  the  Board  of 
Supervisors. 

Approve  the  requested  release  of  $9,410,038  in  reserved 
workers'  compensation  funds. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Workers  Compensation  Division 
City  and  County  of  Sam  Francisco 

DEPARTMENT  OF  HUUAN  RESOURCES 


Attachment    I 
Page   1    of    4 

Voice  (415)  575-560Q 

TDD  (415)  575-5624 

Fax  Claims  (415)  575-5552 

Fax  Administration  (415)  575-56 13 


MEMORANDUM 


TO:  Finance  and  Labor  Committee  Members 

FROM:  Minn  Vu,  Deputy  Director      \wS\J 

DATE:  January  30,  2001 

SUBJECT:  Request  to  Release  Reserve  on  Workers' 

Compensation  Funds 


Recommended  Action 

Release  the  reserve  on  the  workers'  compensation  funds  in  the  2000- 
2001  budget  for  eight  departments  -  Fire,  Police,  Public  Health, 
Human  Services,  Sheriff,  Parking  and  Traffic,  Juvenile  Court,  and 
Recreation  and  Parks. 


Background 

As  part  of  its  deliberations  on  the  FY  2000-2001  budget,  the  Finance 
and  Labor  Committee  reserved  a  portion  (approximately  one-third)  of 
the  workers'  compensation  budget  for  eight  departments.    Based  on 
current  spending  rate,  we  project  that  this  reserve  will  be  needed  to 
cover  expenditures  for  the  remainder  of  this  fiscal  year.   Therefore,  we 
are  requesting  release  of  the  reserve. 


30  VAN  NES3AveSU£.  SUITS  3300        San  ffu^oscs,  CA  9*102-0027 


Attachment  I 
Page  l   ot    k 


nequesc  to  Keiease  reserve  on  wor*ers  coaipeiibouuii  runus 
January  30,  2001 
Page  2 


Analvsis/Reasop  for  Recommendation 

Through  the  end  of  December  2000,  workers'  compensation 
expenditures  for  most  departments  are  in  pace  with  budget.   For  all 
General  Fund  and  General  Fund  supported  departments,  expenditures 
for  the  first  half  of  the  fiscal  year  are  49%  of  the  annual  budget.   For 
six  of  the  eight  departments  whose  workers'  compensation  budgets 
were  partially  held  in  reserve,  expenditures  for  the  first  half  of  the 
fiscal  year  range  from  43%  to  55%  of  annual  budget.   Juvenile  Court 
to  date  only  spent  32%  of  its  annual  workers'  compensation  budget, 
but  Juvenile  Court's  budget  is  relatively  small  and  therefore  subject  to 
fluctuations  In  expenditures.  The  Sheriff's  Department,  on  the  other 
hand,  has  already  spent  75%  of  its  annual  budget  due  to  one 
extraordinary  claim  pay  out  of  $385,880  In  the  second  quarter  (this 
claim  has  now  been  closed),  and  will  need  to  request  a  supplemental 
appropriation  of  funds  even  if  reserve  is  released. 

Workers'  Compensation  Reserves 


Department 

1999-2000 
Expenditures 

2000-2001 
Budget 

Reserved 

Expenditures  1 

as  of 

12/31/00 

Percent 

of 
Annual 
Budget 

Fire 

$6,793,359 

$6,416,523 

$2,122,174 

S3, 017, 575 

47% 

Police 

5,906,704 

6,375,329 

2.000. 1C9 

3.309.274 

52% 

Human  Services 

1,324,407 

1.459,006 

476,335 

803.826 

55% 

Juvenile  Probation 

761,278 

884,155 

294,718 

281.724 

32% 

Parkina  St  Traffic 

1,978,703 

2.174,055 

724,685 

1.021,149 

47% 

Recreation  &  Park 

2.235.240 

1,937.923 

617,820 

1.020.638 

53% 

Sheriff 

1.421.642 

1,394,400 

501,096 

1,046.235 

75% 

Public  Health 

-General  Hospital 
-Laguna  Honda 
-Primary  Care  &  Forensics 
-Population  Health 

Total 

§3,222,711 

2,898,258 

560,905 

1,140,927 

7,822,801 

3,466,402 

2,836,045 

626,608 

1,090,252 

8.019,307 

1,155,467 
945,348 
■208,869 
353,417 

2,673.101 

1,515,427 

1,309,592 
256,724 
327,044 

3.408.&&7 

44% 
46% 
41% 
30% 

43% 

LTotal  8  Deoartments 

1  S2S,090,723 

1  $23,660,698 

1  S9.4lQ,G38 

1  S13.SC9.353 

49% 

Total  all  General  Fund 
and  General  Fund 

i  Suooorted  Deoartments 

1  $-18,797. 545 

S49.02l.543 

$9,410,033 

S24.2ll.147 

49% 

Attachment  I 
Fage  J  ot  4 

Request  to  Release  Reserve  on  Workers'  Compensation  Funds 

January  30,  2Q01 

Page  3 


Many  changes  are  being  implemented  this  fiscal  year  to  better  control 
workers'  compensation  costs  and  improve  services.   The  Workers' 
Compensation  Division  is  under  new  management  effective  August 
2000.   Some  major  changes  being  implemented  by  new  management 
are: 

♦  Transitioning  to  a  new  claims  administration  contract  effective  May 
1,  2001 

♦  Converting  to  a  new  claims  management  information  system 
effective  May  1,  2001 

♦  Re-engineering  claims  administration  process  to  follow  industry 
"best  practices"  approach 

♦  Expanding  medical  provider  networks  to  achieve  higher  savings  on 
medical  costs 

♦  Conducting  a  needs  analysis  for  a  risk  management  information 
system  to  improve  quality  of  data  collection  and  analysis. 

These  changes,  together  with  renewed  emphasis  by  City  departments 
on  transitional  work  programs  and  other  cost  control  efforts,  are 
holding  down  costs  while  improving  services.   After  significant  cost 
increases  in  the  past  several  years,  this  fiscal  year's  workers' 
compensation  costs  for  the  entire  City  are  projected  to  be  below  last 
year's  level  based  on  actual  expenditures  for  the  first  six  months, 
absent  an  extraordinary  or  catastrophic  event  in  the  second  half  of  the 
fiscal  year. 


City  and  County  of  San  Francisco 

Workers'  Compensation  Expenditures  All  Departments 

Six-month  Expenditure  Comparison 

1999-2000  2000-2001 

July-December  July-December 

Fyppndirures  Expenditures 

$27,650,171  $27,329,020 

Trends  in  Annual  Expenditures 

FY96-97  97-98  98-99  99-00  QQ-Q1(*^ 

$39,807,916    $46,294,961    $54,255,996    $55,591,559    $S4,823,445 

(*)  Projected  using  straight-line  method  assuming  2%  increase  for  second  half  of 
fiscal  year  and  adjusted  for  one-time  extraordinary  claim  pay  out  of  $365,880. 


7Q 


Request  to  Release  Reserve  on  worKers'  compensation  runus 
January  30,  2001 
Page  4 


Attachment  I 
Page  4  of  4 


Consequences  of  Negative  Action 

Without  the  release  of  this  reserve,  we  will  have  insufficient  funds 
available  in  our  workers'  compensation  budget  to  cover  expenditures, 
which  are  primarily  benefit  payments  to  our  employees.     Failure  to 
provide  these  legally  required  workers'  compensation  benefits  in  a  timely 
manner  not  only  will  negatively  affect  morale,  it  will  also  have  other 
serious  consequences  including  financial  penalties  and  possible  removal  of 
self-insured  license  for  the  City  by  the  California  Department  of  Industrial 
Relations. 


Chief  Paul  Tabacco,  SFFD 

Captain  John  Goldgerg,  SFPD 

Trent  Rhorer,  DHS 

Mitch  Katz,  DPH 

Jesse  Williams,  Juvenile  Probation 

Fred  Hamdun,  DPT 

Elizabeth  Goldstein,  Rec.&  Park 

Ken  Bruce,  Budget  Analyst's  Office 

Erin  Mc  Grath,  Mayor's  Budget  Office 

Andrea  R.  Gourdine,  DHR 

Matthew  Hymel,  Controller's  Office 


Christine  Pagan,  SFFD 

Captain  Sandra  Tong,  SFFD 

Sally  Kipper,  DHS 

Monique  Zmuda,  DPH 

Ed  Lopatin,  Juvenile  Probation 

Julia  Dawson,  DPT 

Jeffrey  Bramlett,  Rec.&  Park 

Emilie  Neumann,  Budget  Analyst's  Office 

Julian  Low,  Mayor's  Budcet  Office 

William  Lee,  DHR 

Michele  Olson,  Board  of  Supervisors 


An 


TQT«_   P. 66 


Attachment   II 
Page   1   of    2 


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Attachment   II I 
Page   1    of    2 


y  and  County  of  San  Francisco  /^p^S^ 


Michael  Hennessey 


rICE  OF  THE  SHERIFF  fef  €mmmt  XA  sheriff 


415  -  554-  7225 


MEMORANDUM 

Reference  01-007 

TO:  Finance  and  Labor  Committee  Members 

FROM:         Michael  Hennessey,  Sheriff 

DATE:  January  2,  2001  (Revised  January  23,  200i; 

SUBJECT:    Request  to  Release  Reserve  on  Workers  Compensation 
Funds 

Recommended  Action 

Release  the  reserve  on  $501,096  of  the  Sheriff's  Department  workers 
compensation  funds  in  the  2000-01  budget. 

Background 

As  part  of  your  committee's  deliberations  on  the  Sheriff's  Department's 
2000-01  budget,  you  reserved  $501,096  of  our  total  workers 
compensation  budget  of  $1,394,399.  Based  on  our  current  spending 
rate,  we  project  that  we  will  have  exhausted  the  funds  currently 
available  by  the  second  quarterly  billing.  Therefore,  we  are  requesting 
release  of  the  reserve. 

Analysis/Reason  for  Recommendation 

Through  the  end  of  December,  2000,  with  the  exception  of  one  claim, 
workers  compensation  expenditures  for  the  Sheriff's  Department 
totaled  $661,132,  or  approximately  $110,189  per  month,  for  projected 
spending  of  $1,322,268,  or  approximately  5%  less  than  our  budget  of 
$1,394,399.  However,  in  November,  there  was  an  extraordinary  claim 
that  totaled  $385,880,  which  brings  total  projected  spending  for  the 
year  to  $1,708,144,  and  requires  that  we  request  this  release  in 


Attachment   III 
Page  z   or    z 


Sheriff's  Department 

January  2,  2001  (Revised  January  23,  2001) 

Page  2 


January,  2001,  to  have  sufficient  funding  to  pay  this  extraordinary 
claim  as  well  as  our  second  quarter  workers  compensation 
expenditures.  We  plan  to  submit  a  supplemental  appropriation  request 
in  the  spring  to  address  this  extraordinary,  unbudgeted  claim. 

Fiscal  Implications: 

Working  with  the  Mayor's  Office,  we  established  our  2000-01  workers 
compensation  budget  based  on  expenditure  rates  experienced  in  1999- 
2000.  As  shown  above,  without  the  extraordinary  claim,  we  would  be 
within  our  workers  compensation  budget  for  this  fiscal  year. 

We  do  not  make  a  practice  of  including  such  large  claim  settlements  in 
our  regular  budget  because  the  amount  is  usually  not  predictable, 
relying  on  several  possible  outcomes.    Instead,  we  believe  it  more 
prudent  to  budget  a  reasonable  expenditure  rate  and  request  a 
supplemental  appropriation  if  and  when  a  large  claim  occurs. 

The  Workers  Compensation  Division  previously  projected  the  Sheriff's 
Department  would  end  the  year  with  a  deficit  in  its  workers 
compensation  account  of  $0.8  million  based  on  a  straight-line 
projection  including  this  extraordinary  claim.  We  believe  that,  except 
for  this  claim,  and  presuming  no  other  large  settlements,  the  shortfall 
in  this  account  would  be  no  more  than  the  amount  of  the  claim,  that 
is,  $385,880,  based  on  expenditures  through  November  2000. 

Consequences  of  Negative  Action:  Without  the  release  of  this 
reserve,  we  will  have  insufficient  funds  available  in  our  workers 
compensation  budget  to  cover  the  second  quarter  billing  from  the 
Workers  Compensation  Division. 

If  you  have  any  questions  or  comments,  please  contact  Jean  Mariani  at 
(415)  554-4316. 

cc:      Gloria  Young,  Clerk  of  the  Board 

Mary  Red,  Clerk,  Finance  and  Labor  Committee 
Steve  Kawa,  Mayor's  Office 
Edward  Harrington,  Controller 
Harvey  Rose,  Budget  Analyst 


44 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 

Items  7.  8.  and  9  -  Files  01-0150.  00-0276.  and  01-0149 

Note:  An  earlier  version  of  the  proposed  ordinances  (Files  00-0276  and  01- 

0149)  was  considered  under  File  99-1304,  and  an  earlier  version  of  the 
proposed  resolution  adopting  the  final  negative  declaration  (File  01- 

0150)  was  considered  under  File  99-1307.  Both  of  these  earlier 
versions  of  the  subject  legislation  were  continued  at  the  February  9, 
2000  meeting  of  the  Finance  and  Labor  Committee. 

Departments:  Department  of  Building  Inspection  (DBI) 

Mayor's  Office  of  Housing  (MOH) 
Planning  Department 

Item:  File  01-0150 

Resolution  adopting  final  negative  declaration,  finding 
and  determining  that  the  Jobs-Housing  Linkage 
Ordinance  will  have  no  significant  impact  on  the 
environment,  and  adopting  and  incorporating  findings  of 
final  negative  declaration. 

File  00-0276 

Ordinance  amending  Article  III,  Chapter  II,  Part  II  of  the 
San  Francisco  Municipal  Code  (Planning  Code)  by 
amending  Sections  313,  313.1,  313.2,  313.3,  313.4,  313.5, 
313.6,  313.7,  313.8,  313.9,  313.10,  313.11,  313.12,  313.13, 
and  313.14,  to  rename  the  "Office  Affordable  Housing 
Production  Program"  as  the  "Jobs-Housing  Linkage 
Program,"  to  apply  the  program  to  all  new  and  expanded 
hotel  space  of  at  least  25,000  square  feet,  to  all  new  and 
expanded  entertainment  space  of  at  least  25,000  square 
feet,  to  all  new  and  expanded  retail  space  of  at  least 
25,000  square  feet,  and  to  all  new  and  expanded  research 
and  development  space  of  at  least  25,000  square  feet;  to 
set  forth  the  number  of  affordable  housing  units  to  be 
constructed  for  each  type  of  development  subject  to  this 
ordinance;  to  increase  the  number  of  affordable  housing 
units  and  fees  for  office  developments;  and  by  adding 
Section  313.15  to  require  a  study  every  five  years 
determining  the  demand  for  housing  created  by 
commercial  development. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 

File  01-0149 

Ordinance  amending  Article  III,  Chapter  II,  Part  II  of  the 
San  Francisco  Municipal  Code  (Planning  Code)  by 
amending  Sections  313,  313.1,  313.2,  313.3,  313.4,  313.5, 
313.6,  313.7,  313.8,  313.9,  313.10,  313.11,  313.12,  313.13, 
and  313.14,  to  rename  the  "Office  Affordable  Housing 
Production  Program"  as  the  "Jobs-Housing  Linkage 
Program,"  to  apply  the  program  to  all  new  and  expanded 
hotel  space  of  at  least  25,000  square  feet,  to  all  new  and 
expanded  entertainment  space  of  at  least  50,000  square 
feet,  and  to  all  other  new  and  expanded  retail  space  of  at 
least  100,000  square  feet;  to  set  forth  the  number  of 
affordable  housing  units  to  be  constructed  for  each  type  of 
development  subject  to  this  ordinance;  to  set  forth  fees 
for  each  type  of  development  subject  to  this  ordinance;  to 
increase  the  number  of  affordable  housing  units  and  fees 
for  office  developments;  and  by  adding  Section  313.15  to 
require  a  study  every  five  years  determining  the  demand 
for  housing  created  by  commercial  development. 

Description:  The     current     Office     Affordable     Housing     Production 

Program  was  established  in  1985  under  Planning  Code 
Section  313.  This  program  linked  the  development  of 
office  buildings  to  the  demand  for  affordable  housing  by 
requiring  that  the  developers  of  offices  over  50,000  square 
feet  either  build  affordable  housing  or  pay  an  in  lieu  fee. 
A  1990  amendment  to  the  Planning  Code  reduced  the 
threshold  size  for  office  developments  from  50,000  to 
25,000  square  feet.  Therefore,  the  current  ordinance 
requires  developers  of  office  space  which  meet  or  exceed 
the  25,000  square  feet  threshold  to  either: 

•  Build  one  affordable  housing  unit  for  every  6,250 
square  feet  of  new  and  expanded  office  space 
constructed.  This  represents  16  affordable  housing 
units  for  every  100,000  square  feet  of  new  and 
expanded  office  space  constructed;  or 

•  Pay  an  in  lieu  fee  of  $7.05  for  each  square  foot  of  new 
and  expanded  office  space  constructed  to  the  Citywide 
Affordable  Housing  Fund  in  lieu  of  building  affordable 
housing  units. 


BOARD  OF  SUPERVISORS 

BUDGET  ANALYST 

46 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 

The  two  proposed  ordinances  (Files  00-0276  and  01-0149) 
would  extend  the  Office  Affordable  Housing  Production 
Program,  to  be  renamed  the  "Jobs-Housing  Linkage 
Program,"  to  also  cover  new  and  expanded  hotel, 
entertainment,  and  retail  space.  Furthermore,  under  File 
00-0276  (but  not  under  File  01-0149),  the  Jobs-Housing 
Linkage  Program  would  also  cover  research  and 
development  space  as  a  separate  category.  Table  1  below 
compares  the  key  changes  contained  in  these  two 
proposed  ordinances  from  the  existing  Office  Affordable 
Housing  Production  Program. 

Table  1:         Comparison  of  key  changes  contained  in  the  two  proposed 
ordinances 


- 

File  00-0276 

File  01-0149 

Program  applies  to 

Office  (unchanged) 

25,000 

Office  (unchanged) 

25,000 

following  new  and 

Hotel 

25,000 

Hotel 

25,000 

expanded  spaces 

Entertainment 

25,000 

Entertainment 

50,000 

which  meet,  or 

Retail 

25,000 

Retail 

100,000 

exceed,  the 

Research  &  Development 

25,000 

specified  square 

footage: 

Number  of 

Office  (unchanged) 

16 

Office  (unchanged) 

16 

affordable  housing 

Hotel 

11 

Hotel 

11 

units  to  be 

Entertainment 

14 

Entertainment 

14 

constructed  per 

Retail 

14 

Retail 

14 

100,000  sq.  ft  of  new 

Research  &  Development 

20 

and  expanded  space 

(pro-rated): 

In  lieu  fee  payable 

Office  (current  fee  =  $7.05) 

$11.34 

Office  (current  fee  =  $7.05) 

$10.00 

by  developers 

Hotel* 

$8.50 

Hotel* 

$4.25 

instead  of 

Entertainment* 

$10.57 

Entertainment* 

$5.29 

constructing 

Retail* 

$10.57 

Retail* 

$5.29 

affordable  housing 

Research  &  Development* 

$7.55 

units,  per  additional 

gross  sq.  foot,  Mar. 

11,  1999 

(retroactive) 

through  Dec.  31, 

2001: 

*  No  fees  are  charged  under  the  existing  Office  Affordable  Housing  Production  Program. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 


File  00-0276 

File  01-0149 

In  lieu  fee  per 
additional  gross  sq. 
foot,  Jan.  1,  2002 
onwards: 

Office  (current  fee  =  $7.05)       SI 4.96 
Hotel*                                        SI  1.21 
Entertainment*                         $13.95 
Retail*                                        $13.95 
Research  &  Development*         $9.97 

Office  (current  fee  =  $7.05)       $14.00 
Hotel*                                           $4.25 
Entertainment*                           $5.29 
Retail*                                          $5.29 

Fee  revisions: 

To  be  revised  annually  from 
January  1,  2003. 

To  be  revised  annually  from 
November  1,  2001. 

Program  does  not 
apply  to  the 
following1: 

Mission  Bay  North  and  South 
development  projects  which  are 
consistent  with  redevelopment 
plans  and  interagency  cooperation 
agreements  approved  by  the  Board 
of  Supervisors2. 

Pharmacies  and  grocery  stores 
which  would  benefit  areas 
underserved  by  such  retail  uses. 

Mission  Bay  North  and  South 
development  projects  which  are 
consistent  with  the  redevelopment 
plans  and  interagency  cooperation 
agreements  approved  by  the  Board 
of  Supervisors. 

No  fees  are  charged  under  the  existing  Office  Affordable  Housing  Production  Program. 

Under  both  proposed  ordinances,  commercial  property 
developers  would  be  given  a  third  mitigation  payment 
option  in  addition  to  either  constructing  affordable 
housing  or  paying  the  in  lieu  fee.  Commercial  property 
developers  would  be  able  to  contribute  land,  of  equivalent 
value  to  the  in  lieu  fee,  to  affordable  housing  developers  to 
construct  the  specified  number  of  affordable  housing  units 
on  the  commercial  property  developers'  behalf3.   However, 


1  The  existing  ordinance  exempts  commercial  property  developments  on  land  which  is  owned  by 
Federal  or  State  governments,  or  which  is  under  the  jurisdiction  of  the  San  Francisco  Redevelopment 
Agency  or  the  Port  Authority.  Both  of  the  proposed  ordinances  would  further  exempt  Mission  Bay 
redevelopment  projects  under  certain  circumstances.  The  ordinance  under  File  00-0276  would 
further  exempt  pharmacies  and  grocery  stores  which  would  benefit  areas  underserved  by  such  retail 
uses. 

2  According  to  Ms.  Bauman,  the  Mission  Bay  North  Redevelopment  Plan  and  Interagency 
Cooperation  Agreement  were  approved  by  the  Board  of  Supervisors  on  October  26,  1998  (Ordinance 
327-98),  while  the  Mission  Bay  South  Redevelopment  Plan  and  Interagency  Cooperation  Agreement 
were  approved  by  the  Board  of  Supervisors  on  November  2,  1998  (Ordinance  335-98). 

3  If  a  developer  chooses  to  contribute  land  for  affordable  housing  developments  in  lieu  of  the  other 
mitigation  payment  options,  then  the  value  of  the  land  must  be  equal  to,  or  greater  than,  the  in  lieu 
fees  otherwise  payable.    Therefore,  both  proposed  ordinances  would  require  an  appraisal  report,  as 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

48 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 

only  File  01-0149  further  specifies  that  such  land  should 
be  "suitable  for  housing  use." 

The  proposed  final  negative  declaration  (File  01-0150) 
was  adopted  on  April  27,  1999  by  the  Planning 
Commission  which  found  that  there  was  no  substantial 
evidence  that  an  extended  Jobs-Housing  Linkage 
Program  would  have  a  significant  impact  on  the 
environment. 

Comments:  1.      Developers  of  new  office  space  larger  than  25,000 

square  feet  are  required  under  the  existing  Office 
Affordable  Housing  Production  Program  to  either  (a) 
construct  a  specified  number  of  affordable  units 
themselves,  or  (b)  pay  a  fee  of  $7.05  per  square  foot  to  the 
Citywide  Affordable  Housing  Fund  in  lieu  of  building 
affordable  housing4.  The  in  lieu  fee  was  set  at  $7.05  in 
1994  and  has  not  been  increased  since  that  time,  despite 
the  existing  law's  provision  permitting  the  Planning 
Department  to  impose  increases  of  up  to  20  percent 
annually  based  on  increases  to  the  Average  Area  Purchase 
Price  Safe  Harbor  Limitations  for  New  Single-Family 
Residences  for  the  San  Francisco  Primary  Metropolitan 
Statistical  Area  (PMSA),  published  by  the  Internal 
Revenue  Service.  In  the  event  that  the  Internal  Revenue 
Service  does  not  adjust  its  PMSA  statistics  within  a  14- 
month  period,  the  current  ordinance  allows  the  Planning 
Commission  to  authorize  a  study  for  adjusting  the  last 
published  Internal  Revenue  Service  figure,  to  be  effective 
until  the  Internal  Revenue  Service  revises  its  PMSA 
statistics.  Since  the  Internal  Revenue  Service  has  not 
published  an  update  to  its  report  since  1994,  the  Mayor's 
Office  of  Housing  has  contracted  with  private  experts  to 
obtain  average  area  purchase  price  analyses  for  the  San 
Francisco  PMSA  in  1998  and  2000.  The  2000  report, 
prepared  by  Vernazza  Wolfe  Associates,  indicates  a  73.3 
percent    increase    in    purchase    price    figures    for    new 


defined  by  the  Uniform  Standards  of  Professional  Appraisal  Practice,  to  be  prepared  by  a  Member  of 
the  Appraisal  Institute,  which  determines  the  fair  market  value  of  any  land  being  contributed. 
4  The  in  lieu  fee  is  payable  to  the  Planning  Department  prior  to  the  Department  of  Building 
Inspection  issuing  the  first  building  permit  for  a  new  development.  Therefore,  the  in  lieu  fee  must 
be  paid  before  any  construction  can  begin.  If,  during  construction,  the  type  or  square  footage  of  a 
development  changes,  then  the  developer  must  go  back  to  the  Planning  Department  and  the 
Department  of  Building  Inspection  for  consideration  of  the  change. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 


construction  during  the  five-year  period  between  1994 
and  1999.  If  the  in  lieu  fee  for  new  and  expanded  office 
space  had  also  been  increased  by  73.3  percent,  it  would 
now  be  $12.22  per  square  foot. 

2.  According  to  Mr.  Costolino  Hogan  of  the  Planning 
Department,  the  $7.05  fee  has  not  been  increased  since 
1994  because  the  Planning  Department  has  not 
considered  the  matter.  Both  Mr.  Hogan  and  Mr.  Joe 
LaTorre  of  the  Mayor's  Office  of  Housing  note  that  the 
City's  real  estate  market  was  flat  in  the  period  between 
1994  and  1998.  Mr.  LaTorre  states  that  by  1998,  when 
the  real  estate  market  was  rising  in  cost  and  the  Internal 
Revenue  Service  had  not  issued  new  PMSA  statistics,  the 
MOH  contracted  for  new  statistical  information  which 
was  made  available  to  the  Planning  Department. 

Office,  Hotel,  Entertainment,  and  Retail  Space 

3.  Under  the  two  proposed  ordinances  (Files  00-0276 
and  01-0149),  the  Jobs-Housing  Linkage  Program  would 
be  extended  to  cover  development  of  the  following  new 
and  expanded  spaces: 

(a)  Hotel  spaces  25,000  square  feet  or  more. 

(b)  Entertainment  spaces  either  25,000  square  feet  or 
more  (File  00-0276),  or  50,000  square  feet  or  more 
(File  01-0149). 

(c)  Retail  spaces  either  25,000  square  feet  or  more  (File 
00-0276),  or  100,000  square  feet  or  more  (File  01- 
0149). 

Neither  of  the  proposed  ordinances  would  apply  to 
commercial  property  developments  which  construct  less 
space  than  the  square  footage  thresholds  specified  above. 

4.  According  to  Ms.  Catherine  Bauman  of  the  Planning 
Department,  most  office  developers  currently  choose  to 
pay  the  in  lieu  fee,  rather  than  build  the  required  number 
of  affordable  housing  units.  Mr.  LaTorre  states  that  the 
in  lieu  fee  revenue  is  held  in  the  Citywide  Affordable 
Housing  Fund  administered  by  the  Planning  Department 
which  provides  loans  to  affordable  housing  developers, 
subject  to  the  approval  of  the  Director  of  Planning,  in 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 


accordance  with  the  existing  Office  Affordable  Housing 
Production  Program  ordinance  previously  approved  by  the 
Board  of  Supervisors.  Mr.  LaTorre  states  that  the 
Mayor's  Office  of  Housing  makes  recommendations  to  the 
Director  of  Planning  as  to  which  proposed  affordable 
housing  developments  are  in  conformity  with  the  subject 
legislation  and  the  City's  overall  goals  for  housing 
development  and  which,  therefore,  are  eligible  to  receive 
development  funds  from  the  Citywide  Affordable  Housing 
Fund  and  other  funding  sources. 

5.  The  two  proposed  ordinances  (Files  00-0276  and  01- 
0149)  provide  that  equivalent  numbers  of  affordable 
housing  units  would  be  constructed  by  developers  to  meet 
the  requirements  of  the  Jobs-Housing  Linkage  Program 
for  new  and  expanded  office,  hotel,  entertainment,  and 
retail  space.  However,  the  proposed  in  lieu  fees  payable 
by  developers  if  they  choose  not  to  construct  affordable 
housing  themselves  differ  in  the  two  proposed  ordinances, 
as  shown  in  Table  2  below. 


Table  2:        Comparison  of  proposed  in  lieu  fees 


Proposed  Fee 

Proposed  Fee 

Percentage  Difference  in 

File 

File 

Fees  Under  File  00-0276 

Category  of  space 

01-0149 

00-0276 

Over  File  01-0149    / 

March  11,  1999  through 

Dec.  31.  2001 

Office 

$10.00 

$11.34 

13.40 

Hotel 

$4.25 

$8.50 

100.00 

Entertainment 

$5.29 

$10.57 

99.81 

Retail 

$5.29 

$10.57 

99.81 

January  1,  2002  onwards 

Office 

$14.00 

$14.96 

6.86 

Hotel 

$4.25 

$11.21 

163.76 

Entertainment 

$5.29 

$13.95 

163.71 

Retail 

$5.29 

$13.95 

163.71 

6.      Ms.  Audrey  Williams  Pearson  of  the  City  Attorney's 
Office  states  that  there  is  no  precise  correlation  between 

BOARD  OF  SUPERVISORS 

BUDGET  ANALYST 

51 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 


the  number  of  affordable  housing  units  and  the  in  lieu  fee 
levels  which  would  be  required  under  the  two  proposed 
ordinances.  The  level  at  which  in  lieu  fees  are  set,  and 
the  differentiation  between  fee  levels  for  different 
categories  of  space  (office,  hotel,  entertainment,  or  retail), 
are  policy  decisions  for  the  Board  of  Supervisors. 

Estimated  Fee  Revenues  for  New  and  Expanded 
Office,  Hotel,  Entertainment,  and  Retail  Space 

7.  Adoption  of  either  proposed  ordinance  would  result 
in  increased  revenues  for  the  Citywide  Affordable 
Housing  Fund,  or  other  benefits  such  as  increased 
numbers  of  affordable  housing  units  built  by  developers, 
or  increased  contributions  of  land  or  money  to  affordable 
housing  developers.  To  determine  the  extent  of  such 
benefits,  the  Budget  Analyst  used  construction  estimates 
prepared  by  the  Planning  Department  for  the  ten-year 
period  2000  through  2010.  Ms.  Bauman  states  that  the 
estimates  provided  by  the  Planning  Department  are 
based  on  what  the  Planning  Department  estimates  is  (a) 
the  demand  for  new  and  expanded  office,  hotel, 
entertainment,  and  retail  space  in  the  City,  and  (b)  the 
employment  demand  which  would  result  from  such 
development,  consistent  with  the  Association  of  Bay  Area 
Governments'  regional  employment  projections  through 
2010.  The  Planning  Department  estimates  for  the  10 
year  period  from  Year  2000  through  Year  2010  that  there 
may  be  construction  of: 

(a)  Approximately   9,600,000   square   feet   of  new   office 
space. 

(b)  Approximately   1,200,000   square   feet   of  new   hotel 
space. 

(c)  Approximately      2,400,000      square      feet      of     new 
entertainment  and  retail  space. 

This  represents  a  total  of  13,200,000  square  feet  of  new 
office,  hotel,  entertainment,  and  retail  space  in  the  City 
which  could  be  subject  to  the  Jobs-Housing  Linkage 
Program.  If  all  13,200,000  square  feet  of  such  office, 
hotel,  entertainment,  and  retail  space  were  constructed, 
then  the  Citywide  Affordable  Housing  Fund  would  realize 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

52 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 


the  maximum  estimated  in  lieu  fee  revenues  shown  in 
Table  3  below,  assuming  that: 

•  All  of  the  constructed  square  footage  is  in 
developments  which  meet  the  square  footage 
thresholds,  which  are  higher  for  some  categories  under 
File  01-0149.  This  would  be  somewhat  more  likely 
under  the  File  00-0276  proposal  which  has  lower 
thresholds  for  new  and  expanded  entertainment  and 
retail  space  than  the  File  01-0149  proposal. 

•  None  of  the  constructed  square  footage  falls  within  the 
proposed  ordinances'  permitted  exemptions. 

•  All  developers  would  choose  to  pay  in  lieu  fees  instead 
of  either  building  affordable  housing  themselves,  or 
contributing  money  and  land  of  an  equivalent  value  to 
affordable  housing  developers. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 


Table  3: 


Estimated  Revenue  from  Expanded  Jobs-Housing  Linkage  Program. 
2000-2010,  Based  on  Planning  Department  Estimates  of  New  and 
Expanded  Office,  Hotel.  Entertainment,  and  Retail  Space 


In  Lieu 

In  Lieu 

Fee  Total  if 

Fee  Total 

100%  of 

if  50%  of 

New  Space 

New  Space 

Square 

Square 

Meets 

Meets 

Space 

Footage 

Footage 

Fee 

Ordinance 

Ordinance 

Category 

Prooosed  Fees 

Subtotal 

Total 

Subtotal 

Criteria 

Criteria 

File  00- 

0276 

Office 

$11.34  through  12/31/01 
$14.96  from  01/01/02 

1,920,000 
7.680.000 

9,600,000s 

$21,772,800 
114.892,800 

$136,665,600 

$68,332,800 

Hotel 

$8.50  through  12/31/01 
$11.21  from  01/01/02 

240,000 
960.000 

1,200,000 

2,040,000 
10.761.600 

12,801,600 

6,400,800 

Enter- 

$10.57 through  12/31/01 

480,000 

5,073,600 

tainment 

$13.95  from  01/01/02 

1.920.000 

26.784.000 

/Retail 

2.400.000 

31.857.600 

15.928.800 

TOTAL 

13,200,000 

$181,324,800 

590,662,400 

File  01- 

0149 

Office 

$10.00  through  12/31/01 
$14.00  from  01/01/02 

1,920,000 
7.680.000 

9,600,000* 

$19,200,000 
107.520,000 

$126,720,000 

$63,360,000 

Hotel 

$4.25 

1,200,000 

5,100,000 

2,550,000 

Enter- 

$5.29 

2.400.000 

12.696.000 

6.348,000 

tainment 

/Retail 

TOTAL 

13,200,000 

$144,516,000 

$72,258,000 

5  Under  File  00-0276,  it  is  likely  that  some  office  space  would  be  reclassified  as  "research  and 
development"  space  which  would  not  be  subject  to  Proposition  M  office  development  ceilings.  (See 
Comment  No.  9.) 

6  Under  File  01-0149,  some  space  which  would  be  considered  "research  and  development"  space 
under  File  00-0276  would  instead  be  covered  by  this  proposed  ordinance's  expanded  definition  of 
office  space,  and  would  therefore  be  subject  to  Proposition  M  office  development  ceilings.  (See 
Comment  No.  10.) 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 


The  above  table  assumes  that  20  percent  of  estimated 
projects  would  require  developers  to  pay  in  lieu  fees  prior 
to  December  31,  2001  at  the  lower  in  lieu  fee  rates,  while 
the  remaining  80  percent  of  estimated  projects  would 
require  developers  to  pay  in  lieu  fees  at  the  higher  in  lieu 
fee  rates  from  January  1,  2002  onwards. 

8.  Therefore,  the  Planning  Department's  estimated 
increase  of  13,200,000  square  feet  of  new  office,  hotel, 
entertainment,  and  retail  space  in  the  City  could  provide 
maximum  estimated  in  lieu  fee  revenues  of  $181,324,800 
under  File  00-0276,  or  $144,516,000  under  File  01-0149,  a 
difference  of  $36,808,800  more  under  File  00-0276,  during 
the  ten-year  period  between  2000  and  2010.  Of  this 
amount,  $136,665,600  under  File  00-0276,  or 
$126,720,000  under  File  01-0149,  a  difference  of 
$9,945,600  more  under  File  00-0276,  would  be  generated 
by  new  office  development  which  is  already  covered  by  the 
current  ordinance.  Therefore,  the  balance  of  $44,659,200 
under  File  00-0276  (comprising  $12,801,600  for  new  hotel 
space  and  $31,857,600  for  new  entertainment  and  retail 
space),  or  $17,796,000  under  File  01-0149  (comprising 
$5,100,000  for  new  hotel  space  and  $12,696,000  for  new 
entertainment  and  retail  space),  a  difference  of 
$26,863,200  more  under  File  00-0276,  would  be  generated 
by  the  proposed  extension  of  the  Jobs-Housing  Linkage 
Program  to  cover  new  and  expanded  hotel,  entertainment, 
and  retail  developments. 

However,  due  to  the  assumptions  listed  in  Comment  No. 
7,  it  unlikely  that  in  lieu  fee  revenue  would  be  as  high  as 
$181,324,800  under  File  00-0276,  or  $144,  516,000  under 
File  01-0149,  because  it  is  unlikely  that  (a)  all  the 
estimated  square  footage  would  be  constructed,  (b)  all  the 
constructed  space  would  exceed  the  threshold  amounts, 
and  (c)  none  of  the  developments  would  be  exempted. 
Furthermore,  some  developers  might  choose  to  build 
affordable  housing  themselves,  or  contribute  money  or 
land  of  an  equivalent  value  to  affordable  housing 
developeis,  rather  than  pay  an  in  lieu  fee. 

As  shown  in  Table  3,  even  if  only  50  percent  of  the 
maximum  estimated  in  lieu  fee  revenue  was  available 
during  the  ten-year  period  between  2000  and  2010,  File 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 


00-0276  could  generate  an  estimated  $90,662,400,  while 
File  01-0149  could  generate  an  estimated  $72,258,000. 

Research  and  Development  Space 

9.  Only  File  00-0276  proposes  extending  the  Jobs- 
Housing  Linkage  Program  to  cover  new  and  expanded 
research  and  development  space  of  25,000  square  feet  or 
more  as  a  separate  category.  Such  space  is  defined  as 
space: 

...  intended  or  primarily  suitable  for  basic  and 
applied  research  or  systematic  use  of  research 
knowledge  for  the  production  of  materials,  devices, 
systems,  information  or  methods,  including  design, 
development  and  improvement  of  products  and 
processing,  including  biotechnology,  which  involves 
the  integration  of  natural  and  engineering  sciences 
and  advanced  biological  techniques  using  organisms, 
cells,  and  parts  thereof  for  products  and  services, 
excluding  laboratories  which  are  defined  as  light 
manufacturing  uses  .... 

Ms.  Bauman  advises  that  the  Planning  Department  does 
not  separately  collect  information  on  the  construction  of 
such  research  and  development  space.  Therefore,  the 
Planning  Department  is  unable  to  provide  an  estimate  of 
the  in  lieu  fee  revenues  based  on  such  a  category  of  space. 

10.  By  contrast,  File  01-0149  proposes  an  expanded 
definition  of  office  space  which  might  include  components 
of  File  00-0276's  proposed  research  and  development 
space,  such  as  computer  and  data  processing  services, 
multimedia,  and  research  and  development  of  any 
computer-based  technology  (excluding  life  sciences 
research  and  laboratories). 

Final  Negative  Declaration 

11.  The  final  negative  declaration  (File  01-0150)  was 
approved  by  the  Planning  Commission  on  April  27,  1999 
prior  to  submission  of  the  two  proposed  ordinances.  On 
December  6,  2000,  Ms.  Lisa  Gibson  of  the  Planning 
Department  conducted  a  subsequent  review  of  the  two 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

February  7,  2001  Finance  Committee  Meeting 


Recommendation: 


proposed  ordinances  (Files  00-0276  and  01-0149)  and 
found  that  they  would  not  have  immediate  physical 
consequences  or  create  substantial,  unanticipated  growth, 
and  that  individual  affordable  housing  developments 
using  Jobs-Housing  Linkage  Program  funds  or  land  would 
each  be  subject  to  Planning  Department  review  of  project- 
specific  environmental  impacts.  Therefore,  Ms.  Gibson 
determined  that  the  conclusions  reached  in  the  final 
negative  declaration  adopted  and  issued  on  April  27,  1999 
remain  valid  and  that  no  supplemental  environmental 
review  is  required. 

Approval  of  either  of  the  two  proposed  ordinances,  File  00- 
0276  or  File  01-0149,  and  approval  of  the  proposed 
resolution  (File  01-0150),  are  policy  matters  for  the  Board 
of  Supervisors. 


Supervisor  Leno 
Supervisor  Peskin 
Supervisor  Gonzalez 
Clerk  of  the  Board 
Controller 
Steve  Kawa 


Harvey  M.  Rose 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


0.2.5 


I* 


City  and  County  of  Jjian  Francisco 

Meeting  Minutes 

Finance  Committee 

Members:  Supervisors  Mark  Leno,  Aaron  Peskin  and  Matt  Gonzalez 
Clerk:  Gail  Johnson 


[All  Committees] 

Government  Document  Section 

Main  Library 


Wednesday,  February  14,  2001 


10:00  AM 
Regular  Meeting 


City  Hall,  Room  263 


Members  Present:      Mark  Leno,  Aaron  Peskin,  Matt  Gonzalez. 


MEETING  CONVENED 

The  meeting  convened  at  10:05  a.m. 

002146       [Grant  to  develop  a  green  building  tool  kit  and  support  green  building  practices  through  training 
workshops] 
Supervisors  Leno,  Newsom 

Resolution  authorizing  the  Department  of  the  Environment  to  accept  and  expend  a  grant  in  the  amount  of 
$72,450  from  the  California  Integrated  Waste  Management  Board.  (Environment) 
12/6/00,  RECEIVED  AND  ASSIGNED  to  Public  Health  and  Environment  Committee. 
2/5/01,  TRANSFERRED  to  Finance  Committee. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Cal  Broomhead,  Department  of  the 
Environment. 

RECOMMENDED.,  by  the  following  vote: 
Ayes:  3  -  Leno,  Peskin,  Gonzalez 


010110        [Lease  of  City-owned  property  at  850  Bryant  Street] 

Resolution  authorizing  and  approving  lease  of  City-owned  property  located  on  the  fust  floor  of  the  Hall  of 
Justice,  850  Bryant  Street,  to  the  Northern  California  Service  League.  (Real  Estate  Department) 
1/19/01,  RECEIVED  AND  ASSIGNED  to  Finance  Committee. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Anthony  Delucchi,  Director  of  Property,  Real 
Estate  Division,  Administrative  Services  Department;  Shirley  Melnicoe,  Executive  Director,  Northern 
California  Service  League. 
RECOMMENDED.,  by  the  following  vote: 
Ayes:  3  -  Leno,  Peskin,  Gonzalez 


DOCUMENTS  DEPT 

PEB  2  2  200) 

SAN  FRANCISCO 
PUBLIC  LIBRARY 


City  and  County  of  San  Francisco 


Printed  at  7:29  PM  on  2/20/01 


Finance  Committee 


Meeting  Minutes 


February  14,  2001 


010111        [Lease  of  City-owned  property  at  400  McAllister  Street] 

Resolution  authorizing  and  approving  lease  of  City-owned  property  located  on  the  first  floor  of  the  Civic 
Center  Courthouse,  400  McAllister  Street,  to  the  Northern  California  Service  League.  (Real  Estate  Department) 
1/19/01,  RECEIVED  AND  ASSIGNED  to  Finance  Committee. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Anthony  Delucchi,  Director  of  Property,  Real 
Estate  Division,  Administrative  Services  Department;  Shirley  Melnicoe,  Executive  Director,  Northern 
California  Service  League. 
RECOMMENDED.,  by  the  following  vote: 
Ayes:  3  -  Leno,  Peskin,  Gonzalez 


010146        [Lease  of  property  at  1360  Mission  Street  for  DPH-Employee  Assistance  Program| 

Resolution  authorizing  a  new  lease  of  real  property  currently  occupied  by  the  City  under  the  terms  of  an  earlier 
lease  at  1360  Mission  Street,  San  Francisco,  for  a  term  of  three  years  commencing  retroactively  as  of  July  1, 
2000  at  an  initial  monthly  rent  of  58,000  per  month  for  the  Employee  Assistance  Program  of  the  Department  of 
Public  Health.  (Real  Estate  Department) 
1/24/01,  RECEIVED  AND  ASSIGNED  to  Finance  Committee 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Judy  Schutzman,  Department  of  Public 
Health;  Anthony  Delucchi,  Director  of  Property,  Real  Estate  Division,  Administrative  Services  Department, 
Theodore  Lakey,  Deputy  City  Attorney;  Steve  Alms,  Real  Estate  Department 
CONTINUED  TO  CALL  OF  THE  CHAIR  by  the  following  vote: 
Ayes:  3  -  Leno,  Peskin,  Gonzalez 


ADJOURNMENT 


The  meeting  adjourned  at  II:  12  a.m. 


City  and  County  of  San  Francisco 


Printed  at  7:29  PM  on  ZWOl 


[Budget  Analyst  Report] 

Susan  Horn 

Main  Library-Govt.  Doc.  Section 


CITY  AND  COUNTY 


OF  SAN  FRANCISCO 


BOARD  OF  SUPERVISORS 

BUDGET  ANALYST 

1390  Market  Street,  Suite  1025,  San  Francisco,  CA  94102  (415)  554-7642 
FAX  (415)  252-0461 


February  8,  2001 


TO:  ^Finance  Committee 

FROM:        ,  Budget  Analyst 

SUBJECT:^February  14,  2001  Finance  Committee  Meeting 

Item  1  -  File  00-2146 

Department: 

Item: 


DOCUMENTS  DEPT, 

FEB  1  4  2001 

SAN  FRANCISCO 
pUBLIC  LIBRARY 


Amount: 
Grant  Period: 

Source  of  Funds: 
Required  Match: 
Indirect  Costs: 
Description: 


Department  of  the  Environment 


Resolution  authorizing  the  Department  of  the 
Environment  to  accept  and  expend  a  grant  in  the  amount 
of  $72,450  from  the  California  Integrated  Waste 
Management  Board. 

$72,450 

December  1,  2000  through  April  30,  2003  — 
approximately  29  months  (see  Comment  No.  5) 

California  Integrated  Waste  Management  Board 

None  (see  Comment  No.  1) 

Indirect  costs  are  not  allowed  by  the  granting  agency. 

In  July  of  1999,  the  Board  of  Supervisors  adopted  the 
Resource  Efficient  Building  (REB)  ordinance,  which 
established  a  REB  program  and  assigned  a  number  of 
responsibilities  to  the  Department  of  the  Environment, 
including:    (1)    developing    and    implementing    a    green 


Memo  to  Finance  Committee 

February  14,  2001  Finance  Committee  Meeting 

building  training  program,  (2)  providing  information 
about  green  buildings  to  tbe  public,  thereby  encouraging 
the  adoption  of  resource-efficient  building  in  the  private 
sector,  and  (3)  creating  a  pilot  program  to  demonstrate 
innovative  construction  techniques,  building  materials, 
landscaping  methods,  and  other  resource-efficient 
building  systems  in  municipal  faculties.  According  to 
Mr.  Cal  Broomhead  of  the  Department  of  the 
Environment,  green  building  programs  produce  buildings 
that  are  healthier  for  the  occupants  and  have  less  impact 
on  the  local  and  global  environment  than  standard 
building  programs. 

The  subject  grant  would  fund  the  development  of  a  green 
building  tool  kit  and  support  green  building  practices 
through  a  series  of  training  workshops,  as  required  by  the 
REB  ordinance.  The  tool  kit,  including  a  general  green 
building  description,  resource  lists,  sample  specification 
and  contract  language,  and  other  materials,  will  be 
developed  for  City  staff,  as  well  as  for  businesses  and  the 
general  public.  Each  of  the  four  training  workshops  will 
target  a  specific  audience,  including  members  of  the 
Bureau  of  Architecture  and  Bureau  of  Engineering, 
departmental  green  building  liaisons,  and  REB  pilot 
project  teams,  including  project  managers,  architects, 
engineers  and  facility  managers.  The  first  two  training 
workshops  would  be  conducted  in  June  of  2001,  and  the 
other  two  training  workshops  would  be  conducted  in 
January  of  2002. 

Budget:  Attachment    I,    provided    by    the    Department    of    the 

Environment,  provides  budget  details  to  support  the 
proposed  project. 

Comments:  1.  As  shown  in  Attachment  I,  although  matching  funds 

are  not  required  by  the  granting  agency,  the  Department 
has  budgeted  $45,000  in  its  Fiscal  Year  2000-2001  budget, 
as  approved  by  the  Board  of  Supervisors,  in  additional 
funding  for  this  project.  According  to  Mr.  Broomhead,  the 
Department  does  not  expect  to  budget  additional  funds  in 
future  fiscal  years  for  the  proposed  project.  To  date,  none 
of  the  subject  grant  funds  have  been  expended. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

2 


Memo  to  Finance  Committee 

February  14,  2001  Finance  Committee  Meeting 


2.  Of  the  $72,450  in  subject  grant  funds,  $450  would 
remain  in  the  Department's  budget  to  cover  operating 
costs  associated  with  the  proposed  project  such  as  phone, 
fax,  photocopying  and  mail,  as  shown  in  Attachment  II. 
Contractual  services  would  be  provided  by  Global  Green 
USA  with  the  remaining  grant  funds  of  $72,000.  Of  the 
$72,000,  $65,195  in  subject  grant  funds  would  cover  a 
portion  of  the  personnel  costs  of  developing  and 
implementing  the  training  workshops  and  designing  the 
green  tool  kit.  The  remaining  $6,805  would  cover  the 
operating  expenses  incurred  by  Global  Green  USA.  As 
previously  stated,  $450  would  remain  in  the  Department's 
budget  to  cover  the  operating  costs  incurred  by  the 
Department,  for  a  total  of  $7,255  in  operating  costs  for  the 
proposed  project. 

3.  Global  Green  USA  was  selected  on  a  sole  source  basis 
to  work  with  the  Department  of  the  Environment  to 
design  and  conduct  training  workshops  and  the  green 
building  tool  kit.  Global  Green  USA  was  selected  on  a  sole 
source  basis  because  of  their  expertise  in  the  area  of 
developing  and  implementing  green  building  programs. 
According  to  Mr.  Broomhead,  Global  Green's  involvement 
is  integral  to  both  the  successful  application  and 
implementation  of  this  project.  The  application  was 
submitted  by  Global  Green  USA  to  the  Department  of  the 
Environment  after  the  Department  of  the  Environment 
received  a  letter  from  the  City  Attorney's  Office  stating 
the  following:  "We  conclude  that  the  San  Francisco 
Charter  and  Administrative  Code  do  not  require  a  bidding 
process  to  select  the  non-profit  agency  the  Department 
wants  to  work  with  or  to  utilize  that  non-profit  to  perform 
the  work  that  is  the  subject  of  the  grant,  so  long  as  the 
grant  application  to  the  State  clearly  describes  the 
proposed  plan,  including  the  involvement  of  the  non- 
profit, and  the  State  has  no  objection." 

4.  Attachment  II  is  a  Grant  Application  Information 
Form,  as  prepared  by  DPH,  which  includes  a  Disability 
Access  Checklist. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

3 


Memo  to  Finance  Committee 

February  14,  2001  Finance  Committee  Meeting 


5.  Attachment  II  states  that  the  subject  grant  project 
schedule  is  from  December  of  2000  through  May  of  2002. 
However,  Mr.  Broomhead  reports  that  the  subject  grant 
project  schedule  is  actually  from  December  1,  2000 
through  April  30,  2003. 


Recommendation:  Approve  the  proposed  resolution. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

4 


Attachment   I 


Exhibit  D:  BUDGET  ITEMIZATION 
Amended  November  6,  2000 

Proposed  Budget  for  Program  Implementation  Project: 
SF  Environment 


Total  Cost 

REB 

Program 

Funds 

Grant 
Request 

Task  1:  Develop  Tool  Kit 

1.1:  Develop  and  Administer  "Needs" 
Survey 

S  8,854 

$4,855 

$3,999 

1.2:  Analyze  Survey  Results 

$4,251 

$1,055 

$3,196 

1.3:  Identify  Existing  Resources  and  Tool 
Kit  Components  for  Development 

$  9,592 

$2,095 

$  7,497 

1.4:  Develop  Draft  Tool  Kit 

$23,403 

$7,400 

$16,003 

1.5:  Develop  Final  Tool  Kit 

$  18,131 

$8,630 

$9,501 

Task  1  Subtotal 

$40,196 

Task  2:  Develop  and  Conduct  Training 
"Workshops 

2.1:  Develop  Workshops 

$24,630 

$  7,625 

$17,005 

2.2:  Conduct  Workshops 

$21,334 

$  13,340 

$  7,994 

Task  2  Subtotal 

$24,999 

Other  Costs 

Printing — Tool  Kit  Materials 

$2,000 

$2,000 

Graphic  Design 

$2,000 

$2,000 

Workshop  Materials 

$375 

$375 

Phone/Fax 

$250 

$  250 

Postage 

$250 

S  250 

Travel 

$2,380 

$2,380 

Other  Costs  Subtotal 

S7?55 

TOTAL 

$117,450 

$45,000 

$72,450 

.      t  ■  Attachment    II 

.•',"  •  Pa.f>e    1    of    2 

File  Number: 


(Provided  by  Clerk  of  Board  of  Supervisors) 


Grant  Information  Form 

(Effective  January  2000) 


Purpose:  Accompanies  proposed  Board  of  Supervisors  resolutions  authorizing  a  Department  to  accept  and 
expend  grant  funds. 

The  following  describes  the  grant  referred  to  in  the  accompanying  resolution: 

1 .  Grant  Title:  Green  Building  Tool  Kit  and  Training  Workshops 

2.  Department:  Environment 

3.  Contact  Person:  Cal  Broomhead  Telephone:  (415)  554-6390,  (415)  934-4802 

4.  Grant  Approval  Status  (check  one): 

[  ]  Approved  by  funding  agency  [X]  Not  yet  approved 

5.  Amount  of  Grant  Funding  Approved  or  Applied  for:  $72,450 

$45,000  of  REB  program  funds  are  already  in  the  Department  of  the  Environment  budget. 

6a.  Matching  Funds  Required:  SO 
b.  Source(s)  of  matching  funds  (if  applicable):  N/A 

7a.  Grant  Source  Agency:  California  Integrated  Waste  Management  Board 
b.  Grant  Pass-Through  Agency  (if  applicable):  N/A 

8.  Proposed  Grant  Project  Summary:  This  project  is  designed  to  develop  a  green  building  tool  kit  and 
support  green  building  practices  through  a  series  of  training  workshops.  The  tool  kit,  including 
resource  lists,  sample  specification  and  contract  language,  and  other  materials,  will  be  developed  for 
City  &  County  of  San  Francisco  staff,  as  well  as  for  businesses  and  residents  in  and  beyond  San 
Francisco's  borders.  Each  of  the  workshops  will  target  a  specific  audience  such  as  architects, 
engineers,  and  departmental  green  building  liaisons. 

9.  Grant  Project  Schedule,  as  allowed  in  approval  documents,  or  as  proposed: 

Start-Date:  December,  2000  End-Date:  May,  2002 

10.  Number  of  new  positions  created  and  funded:  0 

1 1 .  If  new  positions  are  created,  explain  the  disposition  of  employees  once  the  grant  ends?  N/A 

12a.  Amount  budgeted  for  contractual  services:  $72,000  ($450  will  remain  in  the  Department  budget  to  cover 
hard  costs  for  phone,  fax,  photocopying  and  mail.) 


Attachment   II 

.'  •  b.  Will  contractual  services  be  put  out  to  bid?  No.  The  City  Attorney  has  advised  the  Department  of 
the  Environment  that  bidding  out  the  contractual  services  is  not  required  unless  bidding  is 
required  by  the  granting  agency  (which  it  does  not). 

c.  If  so,  will  contract  services  help  to  further  the  goals  of  the  department's  MBE/WBE 

requirements?  N/A 

d.  Is  this  .likely  to  be  a  one-time  or  ongoing  request  for  contracting  out?  One-time 
13a.  Does  the  budget  include  indirect  costs?  []Yes  [X]  No 

b1 .  If  yes,  how  much?  $     N/A 

b2.  How  was  the  amount  calculated?  N/A 

c.  If  no,  why  are  indirect  costs  not  included? 

[X]  Not  allowed  by  granting  agency  [  ]  To  maximize  use  of  grant  funds  on  direct  services 

[  ]  Other  (please  explain): 

14.  Any  other  significant  grant  requirements  or  comments: 

"Disability  Access  Checklist*** 

15.  This  Grant  is  intended  for  activities  at  (check  all  that  apply): 

[  ]  Existing  Site(s)  [  ]  Existing  Structure(s)  [X]  Existing  Program(s)  or  Service(s) 

[  ]  Rehabilitated  Site(s)  [  j  Rehabilitated  Structure(s)  [  ]  New  Program(s)  or  Service(s) 

[  ]  New  Site(s)  [  ]  New  Structure(s) 

16.  The  Departmental  ADA  Coordinator  and/or  the  Mayor's  Office  on  Disability  have  reviewed  the  proposal 
and  concluded  that  the  project  as  proposed  will  be  in  compliance  with  the  Americans  with  Disabilities  Act  and 
all  other  Federal,  State  and  local  access  laws  and  regulations  and  will  allow  the  full  inclusion  of  persons  with 
disabilities,  or  will  require  unreasonable  hardship  exceptions,  as  described  in  the  comments  section: 

Comments: 


Departmental  or  Mayor's  Office  of  Disability  Reviewer:_ 
Date  Reviewed: 


(Name) 


Department  Approval:  Francesca  Vietor Director 


Memo  to  Finance  Committee 

February  14,  2001  Finance  Committee  Meeting 

Item  2 -File  00-0110 

Departments: 


Item: 


Location: 


Lessor: 


Lessee: 


Administrative  Services  Department 
Real  Estate  Division  (RED) 

Resolution  authorizing  and  approving  a  new  lease  of  City- 
owned  space  located  on  the  first  floor  of  the  Hall  of 
Justice,  850  Bryant  Street,  to  the  Northern  California 
Service  League. 

Room  106  and  Room  116  of  the  Hall  of  Justice  building 
located  at  850  Bryant  Street. 

City  and  County  of  San  Francisco 

Northern  California  Service  League 


No.  of  Sq.  Ft.  and 
Cost  Per  Year  Payable 
by  the  Lessee  to  the 
City: 

Purpose  of  Lease: 


Term  of  Lease: 


Right  of  Renewal: 


621  sq.  ft.  at  $1.00  per  year. 

Space  for  the  Pre-release  Program,  which  provides  social 
services  for  jail  inmates,  and  for  a  Children's  Waiting 
Room  for  children  whose  parents  have  business  with  the 
Superior  Court.  The  Northern  California  Service  League 
currently  occupies  the  subject  621  sq.  ft.  of  City-owned 
space  at  850  Bryant  Street  on  a  month-to-month  basis. 

March  1,  2001  through  February  28,  2002  (one  year) 

The  lessee  has  9  consecutive  one-year  options  to  extend 
the  term  of  the  lease. 


Utilities  Provided 
By  Lessor: 

Janitorial  Services 
Provided  by  Lessee: 


Description: 


The  City  will  pay  for  all  utilities. 


The  lessee  will  be  responsible  for  janitorial  services 
within  their  leased  space. 

The  proposed  resolution  would  authorize  a  one  year  lease 
of  the  294  sq.  ft.  of  Room  106  and  the  327  sq.  ft.  of  Room 
116,  for  a  total  of  621  sq.  ft.  of  City-owned  space  at  the 
Hall    of   Justice,    to    the    Northern    California    Service 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

February  14,  2001  Finance  Committee  Meeting 


League.  The  Northern  California  Service  League  is  a 
nonprofit  organization  that  provides  services  to  persons 
in,  and  recently  released  from  jail  or  prison.  The  Northern 
California  Service  League  has  occupied  Rooms  106  and 
116  in  the  Criminal  Courthouse  at  the  Hall  of  Justice 
since  1991.  As  noted  in  the  Attachment  provided  by  the 
Real  Estate  Division,  the  Northern  California  Service 
League  occupied  the  subject  two  rooms  from  1991  to  1997 
under  two  separate  leases.  According  to  Ms.  Carla  Lieske 
of  the  City  Attorney's  Office,  since  the  termination  of  the 
two  leases  in  1997,  under  State  Common  Law  the 
Northern  California  Service  League  has  continued  to 
occupy  the  subject  rooms  on  a  holdover  basis  under  the 
provisions  of  the  old  leases.  The  Northern  California 
Service  League  has  paid  the  City  $1.00  per  year  in  rent 
for  the  subject  space  since  1991.  The  proposed  lease  would 
authorize  the  lease  of  the  same  space  in  Rooms  106  and 
116  of  the  Hall  of  Justice  to  the  Northern  California 
Service  League  under  one  new  consolidated  lease. 

The  Northern  California  Service  League  operates  both  the 
Pre-release  Program  in  Room  106  consisting  of  294  sq.  ft. 
and  the  Children's  Waiting  Room  in  Room  116  consisting 
of  327  sq.  ft.  The  Pre-release  Program  provides 
educational  programs,  parenting  classes,  and  counseling 
for  jail  inmates.  The  Pre-release  Program  has  three  staff 
members,  including  an  Administrator  and  two 
Counselors,  and  approximately  10  volunteers.  Ms.  Jean 
Medlar  of  the  Real  Estate  Division  reports  that  most  of 
the  Pre-release  Program  activities  with  inmates  take 
place  in  the  City's  jails.  The  Children's  Waiting  Room  is  a 
childcare  center  for  children  whose  parents  have  business 
with  the  Superior  Court.  The  Children's  Waiting  Room 
has  two  staff  members,  one  Coordinator  and  one 
Assistant,  who  provide  childcare  to  a  maximum  of  8 
children  at  any  given  time.  Ms.  Medlar  reports  that  the 
Children's  Waiting  Room  is  open  for  use  between  the 
hours  of  8:30  a.m.  to  12  p.m.,  and  1  p.m.  to  4:30  p.m., 
Monday  through  Friday,  on  days  when  the  Superior  Court 
is  in  session.  According  to  Ms.  Medlar,  the  Children's 
Waiting  Room  is  available  for  use  by  persons  using  the 
Superior  Court  (such  as  family  court  clients,  criminal 
defendants  and  jurors),  at  no  charge,  but  is  not  available 
as  a  permanent  childcare  facility  for  court  employees. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

9 


Memo  to  Finance  Committee 

February  14,  2001  Finance  Committee  Meeting 


Comments: 


1.  According  to  Ms.  Medlar,  the  621  sq.  ft.  of  space  at  the 
Hall  of  Justice  has  a  fair  market  value  of  approximately 
$3.75  per  sq.  ft.  per  month,  totaling  $27,945  in  rent  per 
year.  Ms.  Medlar  states  that  because  the  Pre-release 
Program  and  the  Children's  Waiting  Room  provide  a 
public  benefit  to  the  City,  the  rent  for  the  subject 
properties  paid  by  the  Northern  California  Service 
League  to  the  City  is  $1.00  annually,  the  same  rent  which 
the  Northern  California  Service  League  has  paid  the  City 
since  1991. 


Recommendation: 


2.  Item  3,  File  01-0111,  of  this  report  to  the  Finance 
Committee  pertains  to  another  lease  of  City-owned 
property  to  the  Northern  California  Service  League  for  a 
Children's  Waiting  Room  in  the  Civic  Center  Courthouse. 

Approval  of  the  proposed  resolution  is  a  policy  matter  for 
the  Board  of  Supervisors. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

10 


Attachment 


City  and  County  of  San  Francisco 


Real  Estate  Division 
Administrative  Services  Department 


MEMORANDUM 

February  6,  2001 


TO: 


FROM: 


SUBJECT: 


Harvey  M.  Rose 

Budget  Analyst,  Board  of  Supervisors 


Anthony  J.  DeLucc 
Director  of  Propei 


History  of  Leases  to  Northern  California  service  League 
For  Children's  Waiting  Room  and  Pre-release  Program 


On  1/29/91,  Northern  California  Service  League  leased  two  rooms  located  on  the  main  floor  of  the 
Hall  of  Justice  at  850  Bryant  Street  from  the  City  and  County  of  San  Francisco,  authorized  by 
Ordinance  Numbers  20-91  and  21-91.  Each  room  was  given  a  separate  lease  under  the  same  terms 
and  conditions.  These  leases  were  for  room  106,  the  Children's  Waiting  Room,  and  room  116,  the 
Pre-release  Program.  The  courts  had  requested  that  such  programs  be  established.  Due  to  the 
public  benefit  that  these  programs  offer,  each  room  was  leased  at  the  below  market  rate  of  SI  per 
annum  for  a  two  year  period,  with  two  additional  two  year  extensions.  At  the  expiration  of  both 
lease  extensions  in  1997,  their  service  to  the  City  and  County  of  San  Francisco  continued  on  a 
month-to-menth  basis. 

Northern  California  Service  League  and  the  Civic  Center  Courthouse  arranged  to  provide  space  for 
a  Children's  Waiting  Room  in  room  111  at  400  McAllister  Street.  This  was  recently  brought  to  our 
attention. 

Many  lease  provisions  apply  to  the  building  in  which  the  rooms  are  located.  It  would  be  redundant 
to  give  separate  leases  to  a  tenant  who  leases  multiple  rooms  in  a  single  building.  Therefore,  we  are 
proposing  that  Northern  California  Service  League  be  given  one  lease  for  each  building.  We 
propose  that  one  lease  for  room  111  in  the  Civic  Center  Courthouse  and  one  for  rooms  106  and  116 
in  the  Hall  of  Justice  be  given. 

If  you  need  additional  information,  please  call  Jean  Medlar  at  554-9887. 


cc  Anna  Weinstein,  Associate  Budget  Analyst 


(415)554-9850 
PAX:  (415)  552-9216 


Off  lea  of  the  Director  of  Property  •uMWLwsAKnLo.-cuiMHCJcxv  ***!!»•»*■ 

25  Von  Naaa  Avinut,  Suits  400  San  Francisco,  94102 


11 


TOTAL  P. 02 


Memo  to  Finance  Committee 

February  14,  2001  Finance  Committee  Meeting 


Item  3  -  File  00-0111 
Departments: 

Item: 


Location: 


Lessor: 


Lessee: 


Administrative  Services  Department 
Real  Estate  Division  (RED) 

Resolution  authorizing  and  approving  a  new  lease  of  City- 
owned  space  located  on  the  first  floor  of  the  Civic  Center 
Courthouse,  400  McAllister  Street,  to  the  Northern 
California  Service  League. 

Room  111  of  the  Civic  Center  Courthouse  located  at  400 
McAllister  Street. 

City  and  County  of  San  Francisco 

Northern  California  Service  League 


No.  of  Sq.  Ft.  and 
Cost  Per  Year  Payable 
by  the  Lessee  to 
the  City: 

Purpose  of  Lease: 


Term  of  Lease: 


Right  of  Renewal: 


Utilities  Provided 
By  Lessor: 

Janitorial  Services 
Provided  by  Lessee: 


Description: 


1,760  sq.  ft.  at  $1.00  per  year. 

Space  for  a  Children's  Waiting  Room  for  children  whose 
parents  have  business  with  the  Superior  Court.  The 
Northern  California  Service  League  has  currently 
occupied  the  subject  1,760  sq.  ft.  of  City-owned  space  at 
400  McAllister  Street  without  any  type  of  lease 
agreement  in  place  since  1998. 

March  1,  2001  through  February  28,  2002  (one  year) 

The  lessee  has  9  consecutive  one-year  options  to  extend 
the  term  of  the  lease. 


The  City  will  pay  for  all  utilities. 


The    lessee    will   be    responsible 
within  their  leased  space. 


for  janitorial    services 


The  proposed  resolution  would  authorize  a  one  year  lease 
of  1,760  sq.  ft.  of  City-owned  space  in  Room  111  at  the 
Civic  Center  Courthouse  to  the  Northern  California 
Service  League.  The  Northern  California  Service  League 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

February  14,  2001  Finance  Committee  Meeting 

is  a  nonprofit  organization  that  provides  services  to 
persons  in,  and  recently  released  from  jail  or  prison.  The 
Northern  California  Service  League  has  occupied  Room 
111  in  the  Civic  Center  Courthouse  since  1998.  According 
to  Ms.  Jean  Medlar  of  the  Real  Estate  Division,  since 
1998,  the  subject  property  has  been  occupied  without  any 
type  of  lease  agreement,  and  no  rent  has  been  charged  to 
the  Northern  California  Service  League  by  the  City  to 
date.  According  to  Mr.  Gordon  Park-Li  of  the  Trial  Courts, 
there  is  presently  no  authority  for  the  Northern 
California  Service  League  occupying  this  space  without 
an  agreement  in  place  and  with  no  rental  charge  being 
paid  to  the  City. 

The  Northern  California  Service  League  operates  the 
Children's  Waiting  Room  in  Room  111  of  the  Civic  Center 
Courthouse.  The  Children's  Waiting  Room  is  a  childcare 
center  for  children  whose  parents  have  business  with  the 
Superior  Court.  The  Children's  Waiting  Room  has  two 
staff  members,  one  Coordinator  and  one  Assistant,  who 
provide  childcare  to  a  maximum  of  15  children  at  any 
given  time.  Ms.  Medlar  reports  that  the  Children's 
Waiting  Room  is  open  for  use  between  the  hours  of  8:30 
a.m.  to  12  p.m.,  and  1  p.m.  to  4:30  p.m.,  Monday  through 
Friday,  on  days  when  the  Superior  Court  is  in  session. 
According  to  Ms.  Medlar,  the  Children's  Waiting  Room  is 
available  for  use  by  persons  using  the  Superior  Court 
(such  as  family  court  clients,  criminal  defendants  and 
jurors),  at  no  charge,  but  is  not  available  as  a  permanent 
childcare  facility  for  court  employees. 

Comments:  1.  According  to  Ms.  Medlar,  the  1,760  sq.  ft.  of  space  at 

the  Civic  Center  Courthouse  has  a  fair  market  value  of 
approximately  $3.25  per  sq.  ft.  per  month,  totaling 
$68,640  in  rent  per  year.  Ms.  Medlar  states  that  because 
the  Children's  Waiting  Room  provides  a  public  benefit  to 
the  City,  the  rent  for  the  subject  property  to  be  paid  by 
the  Northern  California  Service  League  to  the  City  will  be 
$1.00  annually. 

2.  Item  2,  File  01-0110,  of  this  report  to  the  Finance 
Committee  pertains  to  another  lease  of  City-owned 
property  to  the  Northern  California  Service  League  for  a 
Children's  Waiting  Room  in  the  Hall  of  Justice. 

BOARD  OF  SUPERVISORS 

BUDGET  ANALYST 

13 


Memo  to  Finance  Committee 

February  14,  2001  Finance  Committee  Meeting 

Recommendation:  Approval  of  the  proposed  resolution  is  a  policy  matter  for 

the  Board  of  Supervisors. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

14 


Memo  to  Finance  Committee 

February  14,  2001  Finance  Committee  Meeting 


Item  4  -  File  01-0146 
Department: 

Item: 


Location: 
Purpose  of  Lease: 


Lessor: 

Lessee: 

No.  of  Sq.  Ft.  and 
Cost  Per  Month: 


Cost: 

Increase  in  Cost: 


Department  of  Public  Health  (DPH) 

Department  of  Administrative  Services,  Real  Estate  Division  (RED) 

Resolution  authorizing  a  new  lease  of  space  currently 
occupied  by  the  City  on  a  month-to-month  basis  under  the 
provisions  of  a  prior  lease  at  1360  Mission  Street  for  a  term 
of  three  years  commencing  retroactively  to  July  1,  2000  at  an 
initial  monthly  rent  of  $8,000  per  month  for  the  Employee 
Assistance  Program  of  the  Department  of  Public  Health 

1360  Mission  Street,  fourth  floor 

To  provide  space  for  the  Department  of  Public  Health's 
Employee  Assistance  Program,  which  has  been  located  in  the 
same  space  at  1360  Mission  Street  since  1990.  The  Employee 
Assistance  Program  is  currently  on  a  month-to-month  lease 
as  set  forth  in  a  holdover  provision  in  the  prior  lease.  The 
Employee  Assistance  Program  provides  counseling  to  City 
employees  on  personal  issues  affecting  their  ability  to  work. 

VILO  Properties,  Inc. 

City  and  County  of  San  Francisco 


2,911  square  feet  at  approximately  S2.75  per  square  foot  per 
month.  The  rent  would  be  subject  to  an  annual  increase  of 
five  percent  each  year  over  the  three-year  term  of  the  lease. 

$8,000  monthly,  or  $96,000  annually 

Under  the  prior  lease,  which  expired  July  1,  2000,  the  City 
paid  a  monthly  rent  of  $3,847,  or  $46,164  annually.  That 
lease  agreement  contained  a  provision  stating  that  rent 
during  a  month-to-month  holdover  period  would  be  charged 
at  150  percent  of  the  previous  rent.  Thus,  the  rent  increased 
as  of  June  30,  2000  from  approximately  $3,847  per  month,  or 
$1.32  per  square  foot  per  month  to  $5,770  per  month  or  $1.98 
per  square  foot  per  month,  or  150  percent  of  the  prior  rental 
rate.  The  City  has  been  paying  this  increased  rental  rate  of 
$3,847  per  month  since  July  1,  2000.  Under  the  proposed 
lease,  the  rent  would  increase  by  an  additional  $2,230  per 

BOARD  OF  SUPERVISORS 

BUDGET  ANALYST 

15 


Memo  to  Finance  Committee 

February  14,  2001  Finance  Committee  Meeting 


Term  of  Lease: 

Utilities  and 

Janitorial 

Services: 

Right  of  Renewal: 


Source  of  Funds: 


Description: 


Comments: 


month  or  $0.77  per  square  foot,  or  by  38.6  percent,  from  the 
previous  holdover  rent  of  $5,770  per  month,  or  $1.98  per 
square  foot,  to  $8,000  per  month,  or  $2.75  per  square  foot. 
The  prior  10  year  and  two  month  lease  began  on  April  1, 
1990  and  ended  June  30,  2000. 

July  1,  2000  through  June  30,  2003  (three  years). 


Landlord  to  pay  for  all  utilities  and  services. 

Two  three-year  options  to  renew  after  the  expiration  of  the 
initial  term  of  the  three-year  lease,  with  the  rent  to  be  set  at 
95%  of  the  market  rate1. 

DPH's  FY  2000-2001  budget,  as  previously  approved  by  the 
Board  of  Supervisors. 

According  to  Ms.  Judy  Schutzman  of  DPH,  the  proposed 
leased  premises  would  continue  to  be  occupied  by  a  total  of 
six  staff  members  of  the  DPH  Employee  Assistance  Program. 
These  six  staff  members  provide  free  individual  and  group 
counseling  to  employees  of  the  City  and  County  of  San 
Francisco  for  personal  issues  that  effect  their  ability  to  work. 
Counseling  includes  topics  such  as  communication  and 
conflict  resolution,  anger  management,  stress  management, 
separation  and  divorce,  balancing  work  and  family  issues, 
and  dealing  with  difficult  people. 

1.  According  to  Ms.  Schutzman,  approximately  30  percent  or 
873  of  the  2,911  square  foot  office  at  1360  Mission  Street  is 
made  up  of  individual  and  group  counseling  areas  used  to 
service  clients  of  the  Employee  Assistance  Program. 
Additionally,  the  Employee  Assistance  Program  currently 
employs  one  full  time  consultant,  and  typically  has  between 
one  and  four  interns  working  at  1360  Mission  space  at  any 
given  time.  The  balance  of  approximately  70  percent  or  2,038 


1  The  prevailing  market  rate  would  be  determined  pursuant  to  a  provision  in  the  subject  proposed 
lease  that  would  require  that  (1)  the  landlord  propose  a  rate  as  the  prevailing  market  rate,  (2)  the 
City  make  a  counter-proposal  if  the  proposed  rate  is  not  agreeable,  (3)  if  no  agreement  is  reached, 
both  parties  meet  no  less  than  twice  to  attempt  to  resolve  any  disagreement,  and  (4)  if  disagreements 
are  not  resolved,  both  parties  participate  in  a  process  to  select  a  neutral  appraiser,  whose  appraisal 
would  then  be  considered  the  prevailing  market  rate. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

16 


Memo  to  Finance  Committee 

February  14,  2001  Finance  Committee  Meeting 


square  feet  of  space  is  typically  occupied  by  eight  to  11 
employees,  providing  an  average  of  approximately  185  to  255 
square  feet  per  employee. 

2.  Mr.  Alms  advises  that  since  the  proposed  rental  rate  of 
$2.75  per  square  foot  was  negotiated  in  October  of  2000,  the 
commercial  real  estate  market  has  softened  somewhat. 
However  Mr.  Alms  advises  that  the  proposed  rental  rate  of 
$2.75  is  still  considered  equal  to  or  below  current  fair  market 
value  which  Mr.  Alms  estimates  to  be  approximately  $3.00 
per  square  foot  per  month.  Mr.  Alms  notes  that  the  second 
floor  (the  Employee  Assistance  Program  is  located  on  the 
fourth  floor)  in  the  subject  building  at  1360  Mission  Street 
rented  at  a  rate  of  approximately  $3.25  per  square  foot  per 
month2  as  recently  as  November  15,  2000. 

3.  According  to  Mr.  Alms,  the  lease  period  would  officially 
commence  retroactive  to  July  1,  2000,  approximately  eight 
months  prior  to  approval  of  the  Board  of  Supervisors, 
because  the  landlord,  VILO  Properties  made  the  retroactive 
commencement  date  of  July  1,  2000  a  condition  of  entering 
into  the  lease  agreement.  Mr.  Alms  notes  that  negotiations 
over  the  proposed  new  lease  commenced  well  before  the  end 
of  the  original  lease  on  June  30,  2000.  However  a  final 
agreement  with  the  landlord  was  only  reached  in  January  of 
2001. 

4.  Under  the  proposed  lease,  the  City  would  be  required  to 
pay  the  lessor  the  difference  between  the  current  monthly 
rent  of  $5,770  and  the  proposed  monthly  rent  of  $8,000,  an 
increase  of  38.6  percent  or  $2,230,  retroactive  to  July  1,  2000. 
If  the  proposed  lease  were  approved  by  the  Board  of 
Supervisors  on  or  about  March  1,  2000,  the  City  would  be 
required  to  pay  VILO  Properties  a  total  retroactive  payment 
of  $17,840  ($2,230  multiplied  by  eight  months). 

5.  The  proposed  lease  includes  a  provision  allowing  the 
landlord  to  terminate  the  lease  at  any  time  after  September 
30,  2002  by  providing  the  City  with  nine  months  notice. 
According  to   Mr.   Alms,    a   real   possibility   exists   for   the 


2  According  to  Mr.  Alms,  the  base  rent  of  this  space  was  $3.00  per  square  foot  per  month.  However, 
the  tenants  are  required  to  pay  utilities  and  services  in  that  lease,  which  brings  the  cost  of  occupying 
that  space  to  a  minimum  of  $3.25  per  square  foot  per  month,  according  to  Mr.  Alms.    Under  the 
subject  proposed  lease,  the  landlord  would  pay  all  utilities  and  services. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

17 


Memo  to  Finance  Committee 

February  14,  2001  Finance  Committee  Meeting 


Recommendation: 


landlord  to  exercise  this  termination  provision,  because  a 
non-profit  public  housing  company,  Mercy  Housing 
Corporation,  owns  property  surrounding  1360  Mission  Street, 
and  has  tentative  plans  to  develop  the  area  for  low-  and 
middle-income  housing.  Mr.  Alms  advises  that  such 
development  would  include  the  subject  leased  premises,  if 
VILO  Properties  elected  to  sell  the  premises  to  the  Mercy 
Housing  Corporation.  Mr.  Alms  notes,  however,  that  it  is  his 
understanding  that  Mercy  Housing  Corporation's  plans  are 
currently  not  final,  and  that  no  development  schedule  has 
been  developed. 

Approval  of  the  proposed  resolution  is  a  policy  matter  for  the 
Board  of  Supervisors  since,  without  first  obtaining  Board  of 
Supervisors  approval:  (a)  DPH  and  the  Real  Estate  Division 
are  requesting  approval  of  the  proposed  lease  retroactive  to 
July  1,  2000  and  (b)  such  retroactivity  results  in  the  City 
being  required  to  pay  an  increase  of  38.6  increase  in  rent 
retroactive  to  July  1,  2000,  resulting  in  a  total  estimated 
retroactive  payment  of  $17,840  from  July  1,  2000  through 
February  28,  2001. 


[arvey  M.  Rose 


Supervisor  Leno 
Supervisor  Peskin 
Supervisor  Gonzalez 
Clerk  of  the  Board 
Controller 
Steve  Kawa 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

18 


[All  Committees] 

Government  Document  Section 
City  and  County  of  Sian  Francisco   Main  Library 

Meeting  Minutes 

.  Finance  Committee  wi™™™ 

Members:  Supervisors  Mark  Leno,  Aaron  Peskin  and  Matt  Gonzalez 
Clerk:  Gail  Johnson 


Wednesday,  February  21,  2001 


10:00  AM 

Regular  Meeting 


City  Hall,  Room  263 


Members  Present:      Mark  Leno,  Aaron  Peskin,  Matt  Gonzalez. 


MEETING  CONVENED 

The  meeting  convened  at  10:06  a.m. 

010039        [Airport  Lease  Agreement  Modification  for  United  Airlines,  Inc.] 

Resolution  approving  Lease  Modification  Number  Three  for  Lease  No.  73-0066  between  United  Airlines,  Inc. 

and  the  City  and  County  of  San  Francisco,  acting  by  and  through  its  Airport  Commission.  (Airport  Commission) 

1/2/01,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee. 

2/1/01,  TRANSFERRED  to  Finance  Committee.  New  committee  structure. 

2/7/01,  CONTINUED.  Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  John  Martin,  Airport  Director;  Theodore  Lakey, 

Deputy  City  Attorney;  Gary  Franzella,  Assistant  Deputy  Airport  Director,  Aviation  Management,  Airport. 

Continued  to  February  2 1 ,  2001 . 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Peter  Nardoza,  Deputy  Airport  Director  for 

Public  Affairs. 

CONTINUED  TO  CALL  OF  THE  CHAIR  by  the  following  vote: 

Ayes:  3  -  Leno,  Peskin,  Gonzalez 


010052        [Airport  Lease  Agreement  for  Plot  6  to  United  Airlines,  Inc.] 

Resolution  approving  lease  agreement  for  Plot  6  between  United  Airlines,  Inc.  and  the  City  and  County  of  San 

Francisco,  acting  by  and  through  its  Airport  Commission.  (Airport  Commission) 

1/10/01,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee. 

2/1/01,  TRANSFERRED  to  Finance  Committee.  New  committee  structure. 

2/7/01,  CONTINUED.  Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  John  Martin,  Airport  Director;  Theodore  Lakey, 

Deputy  City  Attorney. 

Continued  to  February  2 1 ,  200 1 . 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Peter  Nardoza,  Deputy  Airport  Director  for 
Public  Affairs. 

CONTINUED  TO  CALL  OF  THE  CHAIR  by  the  following  vote: 
Ayes:  3  -  Leno,  Peskin,  Gonzalez 


DOCUMENTS  DEPT. 


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S/W  FRAN:  I 
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City  and  County  of  San  Francisco 


Printed  at  7:31  P\f  on  2/22/01 


Finance  Committee 


Meeting  tiliutta 


February'  21,  2001 


010161        [Airport  Concession  Lease| 

Resolution  approving  the  Boarding  Area  "F"  Cosmetic  and  Toiletries  Lease  between  Buth-Na-Bodhaige,  Inc. 
dba  The  Body  Shop,  and  the  City  and  County  of  San  Francisco,  acting  by  and  through  its  Airport  Commission. 
(Airport  Commission) 

1/29/01,  RECEIVED  AND  ASSIGNED  to  Finance  Committee. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Cathy  Widener,  Government  Affairs 
Administrator,  Airport. 

Amended  on  line  3,  after  "approving, "  and  on  line  15,  after  "approve, "  by  adding  "retroactively. " 
AMENDED. 

Resolution  approving,  retroactively,  the  Boarding  Area  "F"  Cosmetic  and  Toiletries  Lease  between  Buth-Na- 
Bodhaige,  Inc.  dba  The  Body  Shop,  and  the  City  and  County  of  San  Francisco,  acting  by  and  through  its 
Airport  Commission.  (Airport  Commission) 
RECOMMENDED  AS  AMENDED.,  by  the  following  Note: 
Ayes:  3  -  Leno,  Peskin,  Gonzalez 


010061        [Substance  Abuse  and  Crime  Prevention  Trust  Fund  and  Designation  of  Lead  Agency) 
Mayor,  Supervisors  Newsom,  Maxwell,  Hall,  McGoldrick,  Daly,  Leno,  Peskin 

Ordinance  adding  Section  10.1 17-126  of  the  San  Francisco  Administrative  Code  establishing  fund  for  deposit 
of  sums  received  under  the  Substance  Abuse  and  Crime  Prevention  Act  of  2000,  and  designating  the 
Department  of  Public  Health  as  the  lead  agency  for  administration  of  the  fund. 
1/16/01,  ASSIGNED  UNDER  30  DAY  RULE  to  Finance  and  Labor  Committee,  expires  on  2/15/2001. 
2/1/01.  TRANSFERRED  to  Finance  Committee  New  committee  structure. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Monique  Zmuda,  Director  of  Finance, 
Department  of  Public  Health;  Theodore  Lakey,  Deputy  City  Attorney;  Edward  Harrington,  Controller. 
Supervisor  Peskin  requested  to  be  added  as  a  co-sponsor. 
AMENDED,  AN  AMENDMENT  OF  THE  WHOLE  BEARING  NEW  TITLE. 

Ordinance  adding  Section  10.100-221  of  the  San  Francisco  Administrative  Code  establishing  fund  for  deposit 
of  sums  received  under  the  Substance  Abuse  and  Crime  Prevention  Act  of  2000,  and  designating  the 
Department  of  Public  Health  as  the  lead  agency  for  administration  of  the  fund. 
RECOMMENDED  AS  AMENDED  by  the  following  vote: 
Ayes:  3  -  Leno,  Peskin,  Gonzalez 


010272        [Appropriation,  funding  for  earthquake  relief  to  El  Salvador] 
Mayor,  Supervisor  Sandoval 

Ordinance  appropriating  5100,000  from  the  General  Fund  Reserve  for  the  Salvadorian  Emergency  Committee 
to  provide  earthquake  relief  for  fiscal  year  2000-01. 
2/12/01,  RECEIVED  AND  ASSIGNED  to  Finance  Committee 
Heard  in  Committee.  Speaker:  Harvey  Rose,  Budget  Analyst. 
RECOMMENDED  by  the  following  vote: 
Ayes:  3  -  Leno,  Peskin,  Gonzalez 


City  and  County  of  San  Francisco 


Printed  at  7i32  PM  on  2A2/01 


Finance  Committee 


Meeting  Minutes 


February  21,  2001 


010108        [Fund  the  development  and  implementation  of  Reengineering  Plan  for  the  Assessor's  Office  Efficiency 
Program] 

Ordinance  appropriating  5726,726  of  the  General  Reserve  to  fund  the  implementation  of  Reengineering  Plan, 
for  the  Assessor's  Office  for  fiscal  year  2000-01.  (Assessor-Recorder) 
1/17/01,  CONTINUED  TO  CALL  OF  THE  CHAIR.  Divided  from  File  002087. 
1/17/01,  RECEIVED  AND  ASSIGNED  to  Finance  and  Labor  Committee. 
2/1/01,  TRANSFERRED  to  Finance  Committee.  New  committee  structure. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Doris  Ward,  Assessor-Recorder;  Debbie  Liu, 
KPMG  Consulting;  Jim  Janette,  Assistant  Assessor;  Rubin  Goodman. 
CONTINUED  TO  CALL  OF  THE  CHAIR  by  the  following  vote: 

Ayes:  3  -  Leno,  Peskin,  Gonzalez 


010208        [Government  funding,  Hetch  Hetchy's  power  purchases] 

Ordinance  appropriating  $25,400,000  of  Hetch  Hetchy  Operating  Fund  to  fund  the  purchase  of  power  to  meet 
municipal  and  contractual  obligations  for  fiscal  year  2000-01.  (Controller) 

(Fiscal  impact.) 

1/31/01,  RECEIVED  AND  ASSIGNED  to  Finance  Committee. 
Heard  in  Committee.  Speakers:  None. 
Continued  to  2/28/01. 
CONTINUED  by  the  following  vote: 
Ayes:  3  -  Leno,  Peskin,  Gonzalez 


002067        [Library  Fines  and  Fees] 
Supervisor  Newsom 

Ordinance  amending  the  San  Francisco  Administrative  Code  by  adding  Section  8.21-2  to  authorize  the  Library 

Commission  to  charge  certain  fines  and  fees  for  the  use  of  library  materials  and  services  and  ratifying  prior 

fines  and  fees. 

1  i/20/00,  ASSIGNED  UNDER  30  DAY  RULE  to  Audit  and  Government  Efficiency  Committee,  expires  on  12/20/2000.  Sponsor 

Supervisor  Kaufman 

1/2/01,  RECOMMENDED  AS  COMMITTEE  REPORT.  Heard  in  Committee.  Speakers:  Susan  Hildreth,  City  Librarian;  Supervisor 

Katz;  Peter  Warfield. 

To  Board  as  Committee  Report  January  2,  2001 . 

1/2/01 ,  PASSED,  ON  FIRST  READING.  Supervisor  Newsom  requested  to  be  added  as  co-sponsor. 

1/16/01 ,  SEVERED  FROM  CONSENT  AGENDA.  Supervisor  Yee  requested  this  matter  be  severed  so  it  could  be  considered  separately. 

1/16/01,  RE-REFERRED  to  Audit  and  Government  Efficiency  Committee. 

2/1/01,  TRANSFERRED  to  Finance  Committee.  New  committee  structure. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Susan  Hildreth,  Acting  City  Librarian; 
Dorothy  Copely,  Public  Library;  Edward  Harrington,  Controller;  George  Nichols,  Finance  Director,  Public 
Library;  James  Chafee;  Theodore  Lakey,  Deputy  City  Attorney;  Peter  Warfield;  Nicole  Termini;  Deetje  Boler; 
Michael  Farrah,  Legislative  Assistant  to  Supervisor  Newsom. 
Continued  to  2/28/01. 
CONTINUED  by  the  following  vote: 
Ayes:  3  -  Leno,  Peskin,  Gonzalez 


City  and  County  of  San  Francisco 


Printed  at  7:32  PM  on  2/22/01 


Finance  Committee  Meeting  Minutes  February  21,  2001 


ADJOURNMENT 


The  meeting  adjourned  at  1:06 p.m. 


City  and  County  of  San  Francisco  4  Printed  at  7:32  PM  on  1/2ZV1 


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A-/ 


CITY  AND  COUNTY 


[Budget  Analyst  Report] 

Susan  Horn 

Main  Library-Govt.  Doc.  Section 


OF  SAN  FRANCISCO 


BOARD  OF  SUPERVISORS 

BUDGET  ANALYST 

1390  Market  Street,  Suite  1025,  San  Francisco,  CA  94102  (415)  554-7642 

FAX  (415)  252-0461 


February  15,  2001 


TO: 
FROM 


Finance  Committee 


-  Budget  Analyst 
SUBJECT:  February  21,  2001  Finance  Committee  Meeting 

Item  1  -  File  01-0039 
Note 


DOCUMENTS  DEPT. 

FEB  2  2  2001 

SAN  FRANCISCO 
pUBLIC  LIBRARY 


This  item  was  continued  by  the  Finance   Committee  at  its  meeting  of 
February  7,  2001. 


Department: 
Item: 

Lessor: 
Lessee: 
Term  of  Lease: 


Right  of  Renewal: 


Description: 


Airport 

Resolution  approving  Lease  Modification  No.  3  for  Lease 
No.  73-0066  between  United  Airlines,  Inc.  and  the  City, 
acting  by  and  through  its  Airport  Commission. 

City  and  County  of  San  Francisco 

United  Airlines,  Inc. 

The  subject  lease  was  first  approved  in  1973  for  an  initial 
20-year  term,  to  expire  in  1993,  with  two  10-year  options  at 
the  discretion  of  the  lessee. 

As  noted  above,  the  20-year  lease  provided  for  two  10-year 
extensions  at  the  discretion  of  the  lessee,  for  a  total  lease 
period  of  up  to  40  years.  In  1993,  United  Airlines  exercised 
its  first  10-year  extension,  which  is  due  to  expire  in  2003. 

On  December  5,  2000  the  Airport  Commission  approved 
Modification  No.  3  of  Lease  73-0066  between  the  Airport 
and  United  Airlines,  Inc.  Under  lease  73-0066,  United 
Airlines  currently  occupies  129.75  acres  of  land  used  by 
United  Airlines  for  employee  parking  and  its  Maintenance 
Operations  Center  (MOC)  for  aircraft  maintenance.  The 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 

subject  lease  was  originally  approved  in  1973  for  an  initial 
term  of  20  years,  with  two  10-year  extension  options  at  the 
discretion  of  the  lessee.  According  to  Ms.  Dorothy  Schimke 
of  the  Airport,  in  1993  United  Airlines  exercised  its  first 
ten-year  option,  which  is  due  to  expire  on  June  30,  2003. 
The  property  leased  by  United  Airlines  is  located  at  the 
intersection  of  San  Bruno  Avenue  and  the  Bayshore 
Freeway. 

The  Airport  is  currently  developing  a  Multi-Modal 
Transportation  Center,  which  includes,  among  other 
elements,  expansion  of  short-term  Parking  Lot  DD,  which 
is  adjacent  to  the  property  leased  by  United  Airlines,  and 
the  extension  of  the  Air  Train  (the  Airport  light  rail  system) 
to  the  Multi-Modal  Transportation  Center  and  Parking  Lot 
DD  (see  Attachment  I,  provided  by  the  Airport,  for  a 
description  of  these  projects).  According  to  Ms.  Schimke, 
Parking  Lot  DD  currently  consists  of  Airport  employee  and 
Airport  tenant  employee  parking.  Ms.  Schimke  advises  that 
Parking  Lot  DD  will  be  expanded  and  initially  used  for 
additional  employee  parking,  and  upon  completion  of  the 
Multi-Modal  Transportation  Center,  the  expanded  portion 
of  Parking  Lot  DD  would  be  converted  for  long-term  public 
parking.  Ms.  Schimke  advises  that  in  order  for  the  Airport 
to  complete  such  an  expansion,  the  Airport  needs  access  to 
Parking  Lot  DD  through  a  portion  of  the  property  currently 
leased  by  United  Airlines.  Under  the  proposed  Modification 
No.  3  to  Lease  73-0066,  United  Airlines  has  agreed  to 
relinquish  to  the  Airport  0.74  acres  of  property.  In  return, 
the  Airport  has  agreed  to  provide  United  Airlines  with 
additional  space  of  up  to  2.61  acres  for  employee  parking, 
as  discussed  below. 

The  proposed  transfer  of  acreage  under  the  subject  lease 
Modification  No.  3  would  take  place  in  the  two  following 
phases: 

(1)  Ms.  Schimke  reports  that  on  December  1,  2000,  United 
Airlines  relinquished  0.74  of  its  total  129.75  in  leased 
property  back  to  the  Airport,  leaving  129.01  acres  under 
the  subject  lease  with  United  Airlines  (see  Comment  No. 
2). 

(2)  In  exchange  for  relinquishing  the  0.74  acres  discussed 
above,  the  Airport  agreed  to  provide  United  with  150 

BOARD  OF  SUPERVISORS 

BUDGET  ANALYST 

2 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 


Rent  paid  by 
United  Airlines 
to  the  Airport: 


additional  parking  spaces  for  United  Airlines  employees 
that  will  be  added  to  the  lease  at  a  future  date,  totaling 
a  maximum  of  2.61  acres.  However,  Ms.  Schimke 
advises  that  the  amended  lease  with  the  Airport  will  not 
include  the  additional  acreage  until  the  Airport 
completes  the  Multi-Modal  Transportation  Center  and 
the  AirTrain,  in  approximately  four  to  six  years,  as 
explained  in  Attachment  I  to  this  report.  During  the 
interim  period,  between  the  time  that  United  Airlines 
relinquished  0.74  acres  of  space  on  December  1,  2000 
and  the  completion  of  the  Multi-Modal  Transportation 
Center  and  the  AirTrain  Extension,  the  Airport  has 
granted  United  Airlines  a  month-to-month  permit, 
effective  December  1,  2000,  for  approximately  2.61  acres 
to  accommodate  the  additional  employee  parking. 
Because  the  guideway  for  the  AirTrain  will  require  use 
of  part  of  the  2.61  acres,  the  Airport  will  not  be  able  to 
determine  the  exact  amount  of  additional  space  that  will 
be  added  to  the  existing  lease  until  the  Multi-Modal 
Transportation  Center  and  the  AirTrain  are  completed. 
Therefore,  proposed  lease  Modification  No.  3  states  that 
the  Airport  and  United  Airlines  agree  to  expand  the 
existing  lease  "after  the  Multi-Modal  Transportation 
Center  and  the  AirTrain  Extension  are  completely 
designed  and  constructed... without  the  requirement  of 
formal  amendment  to  the  Lease  or  the  approval  of  any 
party... as  to  the  dimensions  and  configuration  of  such 
space." 


Rent  for  the  additional  space  to  be  charged  by  the  Airport 
to  United  Airlines  will  be  at  the  same  rate  of  $35,879.50 
per  acre  charged  for  the  existing  lease,  both  when  the  space 
is  under  permit  and  after  it  is  added  to  the  lease.  The  rate 
of  $35,879.50  first  became  effective  in  1998,  according  to 
Ms.  Schimke. 


Ms.  Schimke  advises  that  when  the  first  10-year  lease 
extension  with  United  Airlines  was  negotiated  in  1993, 
United  Airlines  and  the  Airport  agreed  to  an  annual  rent  of 
$32,617.73  per  acre  for  the  first  five  years  of  the  10-year 
extension,  with  one  increase  of  $3,261.77  to  an  annual  rent 
of  $35,879.50,  effective  July  1,  1998,  for  the  remaining  five 
years  of  the  10-year  extension,  expiring  on  June  30,  2003. 
Therefore,  during  the  first  10-year  extension  between  1993 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

3 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 


Permit: 


Compliance  with 
City  Laws: 


Comments: 


and  2003,  the  rent  charged  to  United  Airlines  will  have 
increased  by  only  approximately  10  percent,  or  by 
approximately  an  average  of  one  percent  per  year. 

Under  the  proposed  lease  Modification  No.  3,  the  exchange 
in  space  would  result  in  a  maximum  net  increase  of  1.87 
acres  used  by  United  Airlines  in  this  location  (the  2.61 
acres  in  new  parking  for  United  Airlines  employees,  less 
the  0.74  acres  relinquished  back  from  United  Airlines  to 
the  Airport). 

According  to  Ms.  Schimke,  the  month-to-month  permit 
granted  to  United  Airlines  for  the  2.61  acres  allows  the 
Airport  to  modify  or  terminate  the  permit  with  30-days 
notice.  Ms.  Schimke  advises  that  since  the  Airport  must  use 
portions  of  the  2.61  acres  under  permit  to  United  Airlines 
for  construction  of  the  AirTrain  extension,  the  Airport  will 
reduce  the  number  of  acres  provided  to  United  Airlines 
under  permit  as  needed. 


In  addition,  the  proposed  lease  Modification  No.  3  would 
update  the  existing  lease  to  reflect  changes  to  the 
Administrative  Code  and  other  City  requirements,  such  as 
provisions  requiring  compliance  with  the  ban  on  tropical 
hardwoods  and  virgin  redwood,  the  MacBride  Principles 
related  to  employment  inequity  in  Northern  Ireland,  the 
Non-Discrimination  in  City  Contracts  and  Equal  Benefits 
Ordinance,  and  the  Minimum  Compensation  Ordinance. 

1.  As  previously  noted,  the  proposed  lease  modification 
would  ultimately  result  in  a  maximum  net  increase  of  1.87 
acres  of  space  for  United  Airlines.  The  net  rent  increase 
that  the  Airport  would  receive  annually  from  United 
Airlines  is  $67,095  per  year,  as  shown  in  the  table  below. 
However,  the  increased  acreage  to  be  added  to  the  lease 
will  most  likely  be  less  than  the  estimated  1.87  acres  since 
the  parking  parcel  now  under  permit  will  be  reduced  by 
AirTrain  construction  as  described  above.  Ms.  Schimke 
advises  that  the  Airport  will  not  add  more  than  2.61  acres 
to  the  lease  with  United  Airlines.  The  estimated  net 
increased  rent  of  $67,095  to  be  paid  by  United  to  the 
Airport  is  shown  in  the  table  below.  The  net  increased  rent 
applies  immediately  to  the  estimated  2.61  acres  provided  to 
United  Airlines  under  a  month-to-month  permit  effective 

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February  21,  2001  Finance  Committee  Meeting 


December  1,  2000,  as  well  as  to  the  final  acreage  after  it  is 
incorporated  into  the  existing  lease.  As  stated  previously, 
Ms.  Schimke  reports  that  the  Airport  expects  to  complete 
the  Multi-Modal  Transportation  Center  and  the  AirTrain 
Extension  in  approximately  four  to  six  years,  as  stated  in 
Attachment  I,  provided  by  the  Airport. 


Annual  Cost 
per  Acre 

Total 
Acres 

Annual 
Airport  Revenues 

Existing  Lease 

$35,879.50 

129.75 

4,655,365 

Space  relinquished  by 
United  Airlines  to 
the  Airport 

$35,879.50 

(0.74) 

(26,550) 

Estimated  additional  space 
to  be  leased  by 
United  Airlines 

$35,879.50 

2.61 

93,645 

New  Total 

131.62 

$4,722,460 

Net  Increase     " 

1.87 

$67,095  1 

2.  As  stated  previously,  Ms.  Schimke  advises  that  on 
December  1,  2000,  United  Airlines  relinquished  0.74  acres 
of  space  leased  under  the  existing  contract.  In  addition,  the 
Airport  issued  to  United  Airlines  a  permit,  effective 
December  1,  2000,  to  use  an  additional  2.61  acres  for 
employee  parking,  at  which  point  United  Airlines  began 
paying  additional  rent  to  the  Airport  based  upon  the 
additional  2.61  acres.  Therefore,  the  Budget  Analyst 
recommends  that  the  subject  resolution  be  amended  to 
provide  for  retroactive  authorization.  Ms.  Schimke  advises 
that  the  permit  to  United  for  use  of  the  2.61  acres  will  be 
terminated  when  the  space  is  formally  incorporated  into 
the  existing  lease. 

3.  As  noted  above,  United  Airlines  will  be  charged  rent  for 
the  additional  2.61  acres  at  the  same  rate  of  $35,879.50  per 
acre  charged  for  the  existing  lease  both  when  the  space  is 
under  permit  and  after  it  is  added  to  the  lease.  Ms. 
Schimke  advises  that  the  rate  of  $35,879.50  first  became 
effective  July  1,  1998.  The  Budget  Analyst  notes  that  not 
only  has  this  rent  of  $35,879.50  per  acre  not  been  increased 
since  July  1,  1998,  or  for  2.5  years,  but  additionally,  over 
the  10-year  lease  extension,  which  expires  June  30,  2003, 
the    rental   increases   to    United   Airlines    in    total   have 

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Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 

averaged  approximately  one  percent  per  year  over  10  years, 
or  a  total  increase  of  $3,261.77,  which  adjusted  the  1993 
rent  of  $32,617.73  per  acre  to  the  current  rent  of  $35,879.50 
per  acre. 

Had  this  rent  amount  been  adjusted  upward  according  to 
the  total  11.24  percent  increase  in  the  Consumer  Price 
Index  (CPI)  between  July  1,  1998  and  January  2001,  the 
rent  would  have  increased  by  $4,302.86  to  an  annual  rent 
of  $39,912.35  per  acre.  Furthermore,  the  Budget  Analyst 
questions  why  the  Airport  does  not  require  that  United 
Airlines  pay  the  Airport  an  adjusted  rent  based  on  current 
fair  market  rent  for  the  net  additional  1.87  acres  to  be  used 
by  United  Airlines  (the  2.61  acres  in  new  employee  parking 
for  United  Airlines,  less  the  0.74  acres  relinquished  back  by 
United  Airlines  to  the  Airport). 

According  to  Ms.  Schimke,  the  Airport  agreed  to  the 
proposed  exchange  of  property  with  United  Airlines  and  the 
rental  rate  of  $35,879.50  because  the  0.74  acres  United 
Airlines  has  relinquished  to  the  Airport  is  critical  to  the 
completion  of  the  Air  Train  Extension  and  the  Multi  Modal 
Center.  The  Budget  Analyst  notes,  however,  that  the  net 
additional  1.87  acres  provided  to  United  Airlines  for 
employee  parking  is  apparently  important  to  United 
Airlines  since  United  Airlines  has  requested  the  additional 
land  from  the  Airport.  Therefore,  the  Budget  Analyst 
questions  why  the  Airport  does  not  require  United  Airlines 
to  pay  the  current  fair  market  value  for  the  additional  land 
that  United  will  receive  and  why  the  rent  being  charged  to 
United  Airlines  has  only  been  increased  by  an  average  of 
one  percent  annually  over  the  10-year  lease  extension 
period,  which  expires  on  June  30,  2003. 

4.  Ms.  Schimke  also  states  that  the  original  1973  lease  with 
United  Airlines  contains  no  provisions  for  annual 
adjustments  in  rent  during  the  initial  20-year  term  of  the 
lease,  or  during  each  of  the  subsequent  two  10-year 
extension  periods.  As  discussed  in  Comment  No.  3  above, 
the  existing  lease  provides  that  before  each  of  the  10-year 
extensions,  the  Airport  and  United  Airlines  will  negotiate  a 
revised  rent  based  upon  Airport  appraisals  of  the  land's  fair 
market  value  at  that  time. 


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Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 


5.  In  response  to  the  Budget  Analyst's  report,  Ms.  Schimke 
advises  that  the  Airport  has  negotiated  the  proposed  lease 
Modification  No.  3  to  accommodate  the  Airport.  The  Airport 
went  to  United  Airlines  with  the  request  for  the  Airport  to 
take  back  from  United  Airlines  0.74  acres  of  property  to 
which  United  had  absolute  rights  under  its  long-term  lease, 
according  to  Ms.  Schimke.  The  Airport's  providing  of  up  to 
2.61  acres  of  Airport  property  to  United  Airlines,  which 
would  enable  United  Airlines  to  provide  its  employees  an 
additional  150  parking  spaces  at  the  same  rate  of  the 
existing  lease,  was  the  'price'  for  United  Airline's 
agreement  to  relinquish  the  0.74  acres  back  to  the  Airport, 
according  to  Ms.  Schimke.  Ms.  Schimke  states  that  the 
Airport  was  not  in  a  bargaining  position  to  demand  pricing 
concessions  from  United  as  part  of  this  deal.  Ms.  Schimke 
reiterates  that  the  0.74  acres  that  the  Airport  will  obtain 
from  United  Airlines  is  necessary  for  the  completion  of  the 
Airport's  Multi-Modal  Transportation  Center  and  AirTrain 
extension  (light  rail  system).  In  addition  to  the  important 
public  policy  goals  of  the  Multi-Modal  Transportation 
Center,  according  to  Ms.  Schimke,  the  Parking  Lot  DD 
portion  of  the  project  (see  Attachment  I)  has  significant 
revenue  implications.  Ms.  Schimke  anticipates  that  the 
expansion  of  Parking  Lot  DD  (the  expansion  will  initially 
be  used  for  Airport  employee  parking  and  Airport  tenant 
employee  parking,  and  eventually  for  public  long-term 
parking)  allowed  by  the  recapture  of  the  0.74  acres  from 
United  Airlines  will  generate  additional  parking  revenues 
to  the  Airport  conservatively  estimated  at  $1,017,600  for 
the  first  full  year  of  operation,  rising  to  approximately  $3 
million  per  year  when  the  lot  reaches  capacity.  Ms. 
Schimke  advises  that  these  parking  revenues  will  increase 
significantly  once  the  lot  converts  the  Airport  employee  and 
Airport  tenant  employee  parking  to  pub  He  long-term 
parking  when  the  Multi-Modal  Transportation  Center  is 
completed. 

6.  Under  the  terms  of  the  lease,  not  until  the  current  10- 
year  lease  extension  expires  on  June  30,  2003  will  the 
Airport,  in  conjunction  with  the  Department  of  Real 
Estate,  appraise  the  value  of  the  land  and  negotiate  with 
United  Airlines  a  revised  rent  based  upon  the  land's  fair 
market  value  at  that  time,  as  of  July  1,  2003. 

7.  As  previously  noted,  in  1993,  under  the  first  10-year 
extension,  the  Airport  and  United  Airlines  negotiated  an 

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Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 

adjusted  rent  for  this  first  10-year  extension,  effective  July 
1,  1993,  to  increase  the  annual  rent  by  $3,261.77,  from 
$32,617.73  per  acre  to  $35,879.50  per  acre  annually, 
effective  July  1,  1998.  This  one  and  only  rent  increase 
represents  an  average  increase  of  only  one  percent 
annually,  or  a  total  increase  of  10  percent  over  the  10-year 
lease  extension.  This  mid-term  adjustment  was  not 
intended  to  reflect  fair  market  value  at  mid-term,  according 
to  Ms.  Schimke.  While  the  Budget  Analyst  acknowledges 
that  the  1973  original  lease  contained  no  provisions  for 
annual  rent  adjustments,  nothing  precludes  the  Airport 
from  negotiating  a  rent  adjustment  at  this  time,  since  the 
Airport  is  requesting  approval  from  the  Board  of 
Supervisors  of  a  proposed  new  lease  Modification  No.  3, 
which  would  provide  United  Airlines  with  1.87  additional 
acres  of  Airport  property. 

8.  At  the  February  7,  2001  Finance  Committee  meeting,  the 
Airport  Director  stated  that  in  negotiating  the  proposed 
lease  modification  with  United  Airlines,  the  Airport  took 
into  consideration  an  additional  $220,000  for  security  and 
related  costs  that  United  Airlines  reports  it  would  be 
required  to  pay  to  operate  the  additional  2.61  acres 
provided  under  the  subject  lease  modification.  According  to 
Mr.  Gary  Franzella  of  the  Airport,  United  Airlines  reports 
that  the  $220,000  in  additional  costs  would  result  from  the 
need  to  provide  two  security  guards  on  the  premises,  seven 
days  a  week,  which  would  require  United  Airlines  to 
employ  six  full-time  equivalent  (FTE)  employees. 

9.  At  its  meeting  of  February  7,  2001,  the  Finance 
Committee  requested  the  Airport  Director  to  attempt  to 
renegotiate  the  proposed  lease  modification  in  order  to 
require  United  Airlines  to  pay  to  the  Airport  Consumer 
Price  Index  adjustments  and/or  fair  market  value  for  the 
subject  2.61  acres. 

As  of  the  writing  of  this  report,  according  to  Mr.  Peter 
Nardoza  of  the  Airport,  the  Airport  has  not  yet  been  in 
contact  with  representatives  of  United  Airlines  concerning 
a  possible  renegotiation  of  this  lease  modification,  as 
requested  by  the  Finance  Committee.  Therefore,  Mr. 
Nardoza  is  requesting  that  this  item  be  continued  for  two 
weeks. 


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8 


FEB  2  2  2001 

SAN  FRANCISCO 
PUBLIC  LIBRARY 


Memo  to  Finance  Committee  REVISED    2/16/01 

February  21,  2001  Finance  Committee  Meeting        Item  1  ~  File  01-0039 
Note:  Subsequent  to  the  issuance  of  the  Budget  Analyst's  report,  the  Airport  revised  the  amount  of  the  net 
revenue  realized  by  the  Airport  from  long  term  public  parking  spaces  from  their  previously  reported  S3 1 8 
per  month  to  S222  per  month.  This  does  not  change  the  conclusions  of  the  Budget  Analyst. 

10.  The  Finance  Committee  also  requested  at  its  February 
7,  2001  meeting  that  the  Budget  Analyst  attempt  to 
determine  a  fair  market  value  for  the  150  parking  spaces  to 
be  used  for  United  Airlines  employee  parking  in  the  2.61 
acres  of  additional  space  to  be  provided  to  United  Airlines 
under  the  proposed  lease  modification. 

According  to  the  Ms.  Schimke,  the  Airport  currently 
charges  $48  per  parking  space  permit,  per  month,  or  $576 
annually,  for  comparable  space  used  by  airlines  for 
employee  parking  (parking  with  no  bus  service),  which  the 
Airport  provides  to  airlines  on  a  per  space  permit  basis.  Ms. 
Schimke  advises  that  this  rate  is  based  on  the  Airport's 
Rates  and  Charges  for  Airlines,  which  is  adjusted  and 
published  annually  by  the  Airport.  Since  the  Airport  can  in 
some  cases  rent  on  average  two  permits  per  parking  space 
(since  the  Airport  is  open  24  hours  per  day),  the  average 
monthly  value  of  a  parking  space  for  airline  employees  is 
$96  per  month,  according  to  Mr.  Franzella.  At  this  rate  of 
$96  per  month,  the  total  value  of  the  150  subject  parking 
spaces  would  be  $14,400  per  month,  or  $172,800  annually. 
Under  the  proposed  lease  modification,  based  on  the 
$93,645  rental  revenue  per  year  payable  by  United  Airlines 
to  the  Airport  for  the  2.61  acres  which  provide  United 
Airlines  with  150  parking  spaces,  United  Airlines  would 
pay  to  the  Airport  an  average  of  approximately  $52.03  per 
month  per  parking  space,  or  approximately  $7,804  per 
month  ($93,645  annually)  for  the  entire  2.61  acres.  This 
$52.03  is  approximately  $43.97  less  per  parking  space  per 
month  ($96  less  $52.03)  than  the  average  monthly  rate  of 
$96  per  month  per  parking  space  that  the  Airport  is 
currently  charging  for  airline  employee  parking.  Ms. 
Schimke  advises  that  in  addition  to  the  150  parking  spaces, 
the  subject  2.61  acres  includes  circulation  space  for 
vehicles.  Under  the  subject  lease  and  proposed 
modification,  United  Airlines  would  not  be  able  to 
reconfigure  the  parking  layout  to  create  additional  parking 
spaces,  according  to  Mr.  Franzella. 

Furthermore,  based  on  a  comparison  of  parking  available  in 
the  general  vicinity  of  the  Airport,  CalTrans  currently 
charges  on  average  $61  (approximately  $59  to  $63  per 
month)  for  leased  paved  parking  spaces  approximately  the 
same  size  as  the  subject  150  parking  spaces  to  be  provided 

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9 


idget  Analyst  Report] 

isan  Horn 

3in  Library-Govt.  Doc.  Section 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 


to  United  Airlines  at  the  Airport1),  according  to  information 
provided  to  the  Budget  Analyst  by  the  Division  of  Real 
Estate. 


In  addition,  if  the  Airport  were  to  have  to  dedicated  the 
2.61  acre  area  for  public  parking  use  instead  of  for  United 
Airlines  employee  parking,  which  in  fact  the  Airport 
intends  to  eventually  do  in  its  Parking  Lot  DD,  which  is 
adjacent  to  the  2.61  acres  being  provided  to  United 
Airlines,  then  the  Airport  could  have  charged  its  current 
rate  of  $15  per  day  per  space2  for  long-term  public  parking, 
or  approximately  $450  per  month  ($5,400  annually), 
according  to  Ms.  Schimke.  The  Airport  collects  an  average 
net  revenue  of  $222  per  parking  space  per  month  ($2,664 
annually)  from  long-term  public  parking,  accounting  for 
operating  costs  and  fluctuations  in  demand,  according  to 
Mr.  Franzella.  Mr.  Franzella  advises  that  the  Airport 
would  not  have  elected  to  use  the  subject  2.61  acres  for 
long-term  public  parking  due  to  the  property's  location  and 
the  investment  that  would  have  been  required  to  construct 
the  infrastructure  necessary  for  long-term  parking. 

A  comparison  of  such  parking  charges  are  as  follows: 


Parking  Use 

Monthly  Rate 

Charged  per 

Space 

Total  Annual 

Rent  for 

150  Spaces 

Proposed  Lease  Modification. 

2.61  acres  including  150  parking  spaces  for  the 
proposed  rent  being  charged  to  United 

$52.03 

593,645 

CalTrans  Leased  Parkine  Space 
in  Vicinity  of  Airport  (average  rent) 
for  150  parking  spaces 

S61 

S109.800 

Comparable  Charges  by  the  Airport  for 

Airline  Employee  Parking  for  150  parking  spaces 
(provided  per  space,  based  on  two  permits  each) 

$96 

$172,800 

Long-Term  Airport  Public  Parking 

(Approximate  Net  Revenue  for  Airport 
for  150  parking  spaces) 

$222 

$399,600 

1  The  Real  Estate  Division  reports  that  CalTrans  pays  a  maximum  of  50.20  per  square  foot  of 
comparable  paved  parking,  which  when  multiplied  by  the  average  Airport-reported  315  square-feet 
of  each  of  the  subject  150  parking  spaces,  would  result  in  a  monthly  parking  rate  of  S63. 

2  Ms.  Schimke  advises  that  the  Airport  charges  for  long-term  parking  SI   for  every   15 
minutes,  with  a  maximum  daily  fee  of  $15. 

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Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 

As  shown  in  the  above  table: 


•  Based  on  150  parking  spaces,  the  proposed  $93,645 
annual  rent  to  be  charged  to  United  Airlines  under  the 
proposed  subject  lease  modification  would  be  $16,155 
less  than  the  approximate  annual  rent  of  $109,800 
charged  by  CalTrans  for  similar  parking  spaces  in  the 
vicinity  of  the  Airport. 

•  Moreover,  according  to  the  Airport,  the  annual  $93,645 
rent  to  be  charged  to  United  Airlines  under  the  proposed 
subject  lease  modification  charged  for  the  subject  150 
parking  spaces  under  the  proposed  lease  modification, 
including  additional  vehicle  circulation  space,  would  be 
$79,155  less  than  the  $172,800  annual  amount  charged 
by  the  Airport  per  space  (based  on  an  average  of  2 
permits  per  space)  to  airlines  for  permits  for  airline 
employee  parking. 

•  Further,  the  proposed  annual  rent  of  $93,645  to  be 
charged  by  United  Airlines  under  the  proposed  subject 
lease  modification  would  be  $305,955  less  than  the 
estimated  $399,600  in  net  revenue  that  the  Airport 
earns  from  150  long-term  parking  places,  not  accounting 
for  any  initial  investment  costs  which  would  be  required 
by  the  Airport  for  long-term  parking. 

11.  Based  on  the  data  obtained  in  response  to  the  Finance 
Committee's  question  concerning  the  value  of  parking 
spaces  included  in  the  proposed  lease  with  United  Airlines: 

a)  under  the  proposed  lease  modification  the  rent  charged 
to  United  Airlines  of  $52.03  monthly  for  each  of  the  150 
parking  spaces  would  be  14.7  percent  less  than 
comparable  parking  in  the  vicinity  of  the  Airport  of 
approximately  $61  monthly  for  the  parking  leased  by 
CalTrans  and  45.8  percent  less  than  the  monthly  $96 
the  Airport  currently  charges  Airlines  per  employee 
parking  space,  based  on  an  average  of  two  permits  per 
space;  and, 

b)  under  the  proposed  lease  modification  the  rent  charged 
to  United  Airlines  of  $52.03  monthly  for  each  of  the  150 
parking  spaces  would  be  76.6  percent  less  than  the 

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Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 

average  $222  monthly  net  revenue  per  space  that  the 
Airport  currently  receives  for  long-term  Airport  public 
parking. 

12.  The  Budget  Analyst  based  the  above  calculations  on  the 
assumption  that,  under  the  proposed  lease  modification, 
the  United  Airlines  would  be  provided  150  new  parking 
spaces,  based  upon  information  received  from  the  Airport. 
However,  the  Airport  now  advises  that  United  Airlines  will 
receive  a  net  total  of  75  new  parking  spaces  (the  150 
parking  spaces  provided  in  the  subject  2.61  acres  less  75 
parking  spaces  under  the  0.74  acres  which  United  Airlines 
has  agreed  to  relinquish  to  the  Airport  under  the  proposed 
lease  modification.)  According  to  Mr.  Franzella,  the  Budget 
Analyst  should  consider  the  land  value  of  the  subject  2.61 
acres  based  on  the  value  of  75  parking  spaces,  as  opposed  to 
150  parking  spaces.  However,  if  a  comparison  of  75  parking 
spaces,  instead  of  150  were  made,  the  relationship  between 
the  individual  parking  space  valued  in  this  analysis  would 
remain  identical.  Furthermore,  we  disagree  with  Mr. 
Franzella.  The  analysis  by  the  Budget  Analyst  addresses 
the  fair  market  value  of  the  new  space  that  will  now  be 
leased  to  United  Airlines  that  includes  150  parking  spaces. 

Recommendations:      1.  Amend  the  proposed  resolution  to  provide  for  retroactive 
authorization,  in  accordance  with  Comment  No.  2  above. 

2.  Approval  of  the  proposed  resolution,  as  amended,  is  a 
policy  matter  for  the  Board  of  Supervisors  since  under  the 
proposed  lease  Modification  No.  3,  the  Airport  will  not 
receive  current  fair  market  value  until  July  1,  2003  and,  as 
the  lease  presently  states,  the  Airport  does  not  require 
United  Airlines  to  pay  annual  rent  adjustments  based  on 
annual  percentage  increases  in  the  Consumer  Price  Index 
(CPI)  over  the  entire  potential  40-year  term  of  this  lease.  In 
addition,  the  fair  market  value  rates  of  the  parking  spaces 
to  be  provided  to  United  Airlines  under  the  proposed  lease 
are  considerably  less  than  comparable  parking  rates  that 
could  be  received  for  parking  as  noted  in  Comments  10  and 
11,  above. 

3.  As  requested  by  the  Airport,  continue  this  proposed 
resolution  for  two  weeks,  in  accordance  with  Comment  No. 
9  above. 


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1   9 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 


10.  The  Finance  Committee  also  requested  at  its  February 
7,  2001  meeting  that  the  Budget  Analyst  attempt  to 
determine  a  fair  market  value  for  the  150  parking  spaces  to 
be  used  for  United  Airlines  employee  parking  in  the  2.61 
acres  of  additional  space  to  be  provided  to  United  Airlines 
under  the  proposed  lease  modification. 

According  to  the  Ms.  Schimke,  the  Airport  currently 
charges  $48  per  parking  space  permit,  per  month,  or  $576 
annually,  for  comparable  space  used  by  airlines  for 
employee  parking  (parking  with  no  bus  service),  which  the 
Airport  provides  to  airlines  on  a  per  space  permit  basis.  Ms. 
Schimke  advises  that  this  rate  is  based  on  the  Airport's 
Rates  and  Charges  for  Airlines,  which  is  adjusted  and 
published  annually  by  the  Airport.  Since  the  Airport  can  in 
some  cases  rent  on  average  two  permits  per  parking  space 
(since  the  Airport  is  open  24  hours  per  day),  the  average 
monthly  value  of  a  parking  space  for  airline  employees  is 
$96  per  month,  according  to  Mr.  Franzella.  At  this  rate  of 
$96  per  month,  the  total  value  of  the  150  subject  parking 
spaces  would  be  $14,400  per  month,  or  $172,800  annually. 
Under  the  proposed  lease  modification,  based  on  the 
$93,645  rental  revenue  per  year  payable  by  United  Airlines 
to  the  Airport  for  the  2.61  acres  which  provide  United 
Airlines  with  150  parking  spaces,  United  Airlines  would 
pay  to  the  Airport  an  average  of  approximately  $52.03  per 
month  per  parking  space,  or  approximately  $7,804  per 
month  ($93,645  annually)  for  the  entire  2.61  acres.  This 
$52.03  is  approximately  $43.97  less  per  parking  space  per 
month  ($96  less  $52.03)  than  the  average  monthly  rate  of 
$96  per  month  per  parking  space  that  the  Airport  is 
currently  charging  for  airline  employee  parking.  Ms. 
Schimke  advises  that  in  addition  to  the  150  parking  spaces, 
the  subject  2.61  acres  includes  circulation  space  for 
vehicles.  Under  the  subject  lease  and  proposed 
modification,  United  Airlines  would  not  be  able  to 
reconfigure  the  parking  layout  to  create  additional  parking 
spaces,  according  to  Mr.  Franzella. 

Furthermore,  based  on  a  comparison  of  parking  available  in 
the  general  vicinity  of  the  Airport,  CalTrans  currently 
charges  on  average  $61  (approximately  $59  to  $63  per 
month)  for  leased  paved  parking  spaces  approximately  the 
same  size  as  the  subject  150  parking  spaces  to  be  provided 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

9 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 


to  United  Airlines  at  the  Airport1),  according  to  information 
provided  to  the  Budget  Analyst  by  the  Division  of  Real 
Estate. 

In  addition,  if  the  Airport  were  to  have  to  dedicated  the 
2.61  acre  area  for  public  parking  use  instead  of  for  United 
Airlines  employee  parking,  which  in  fact  the  Airport 
intends  to  eventually  do  in  its  Parking  Lot  DD,  which  is 
adjacent  to  the  2.61  acres  being  provided  to  United 
Airlines,  then  the  Airport  could  have  charged  its  current 
rate  of  $15  per  day  per  space2  for  long-term  public  parking, 
or  approximately  $450  gross  per  month  ($5,400  annually), 
according  to  Ms.  Schimke.  The  Airport  collects  an  average 
net  revenue  of  $318  per  parking  space  per  month  ($3,816 
annually)  from  long-term  public  parking,  accounting  for 
fluctuations  in  demand,  according  to  Mr.  Franzella.  Mr. 
Franzella  advises  that  the  Airport  would  not  have  elected 
to  use  the  subject  2.61  acres  for  long-term  public  parking 
due  to  the  property's  location  and  the  investment  that 
would  have  been  required  to  construct  the  infrastructure 
necessary  for  long-term  parking. 

A  comparison  of  such  parking  charges  are  as  follows: 


Parking  Use 

Monthly 

Rate 
Charged 
per  Space 

Total 

Annual 

Rent  for 

150  Spaces 

Proposed  Lease  Modification, 

2.61  acres  including  150  parking  spaces  for 
the  proposed  rent  being  charged  to  United 

$52.03 

$93,645 

CalTrans  Leased  Parking  Space  in 

Vicinity  of  Airport  (average  rent)  for  150 
parking  spaces 

$61 

$109,800 

Comparable  Charges  by  the  Airport  for 
Airline  Employee  Parking  for  150  parking 
spaces  (provided  per  space,  based  on  two 
permits  each) 

$96 

$172,800 

Long-Term  Airport  Public  Parking 

(Net  Revenue  for  Airport  for  150  parking 
spaces) 

$318 

$572,400 

1  The  Real  Estate  Division  reports  that  CalTrans  pays  a  maxim  vim  of  SO. 20  per  square  foot  of 
comparable  paved  parking,  which  when  multiplied  by  the  average  Airport-reported  315  square-feet 
of  each  of  the  subject  150  parking  spaces,  would  result  in  a  monthly  parking  rate  of  $63. 

2  Ms.  Schimke  advises  that  the  Airport  charges  for  long-term  parking  SI  for  every  15 
minutes,  with  a  maximum  daily  fee  of  $15. 

BOARD  OF  SUPERVISORS 
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10 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 

As  shown  in  the  above  table: 


•  Based  on  150  parking  spaces,  the  proposed  $93,645 
annual  rent  to  be  charged  to  United  Airlines  under  the 
proposed  subject  lease  modification  would  be  $16,155 
less  than  the  approximate  annual  rent  of  $109,800 
charged  by  CalTrans  for  similar  parking  spaces  in  the 
vicinity  of  the  Airport. 

•  Moreover,  according  to  the  Airport,  the  annual  $93,645 
rent  to  be  charged  to  United  Airlines  under  the  proposed 
subject  lease  modification  charged  for  the  subject  150 
parking  spaces  under  the  proposed  lease  modification, 
including  additional  vehicle  circulation  space,  would  be 
$79,155  less  than  the  $172,800  annual  amount  charged 
by  the  Airport  per  space  (based  on  an  average  of  2 
permits  per  space)  by  the  Airport  to  airlines  for  permits 
for  airline  employee  parking. 

•  Further,  the  proposed  annual  rent  of  $93,645  to  be 
charged  by  United  Airlines  under  the  proposed  subject 
lease  modification  would  be  $478,755  less  than  the 
estimated  $572,400  in  net  revenue  that  the  Airport 
earns  from  150  long-term  parking  places,  not  accounting 
for  any  initial  investment  costs  which  would  be  required 
by  the  Airport  for  long-term  parking. 

11.  Based  on  the  data  obtained  in  response  to  the  Finance 
Committee's  question  concerning  the  value  of  parking 
spaces  included  in  the  proposed  lease  with  United  Airlines: 

a)  the  proposed  lease  modification  which  would  result  in  a 
rent  charged  to  United  Airlines  of  $52.03  monthly  for 
each  of  the  150  parking  spaces  would  be  14.7  percent 
less  than  comparable  parking  in  the  vicinity  of  the 
Airport  of  approximately  $61  monthly  for  the  parking 
leased  by  CalTrans  and  45.8  percent  less  than  the 
monthly  $96  the  Airport  currently  charges  Airlines  per 
employee  parking  space,  based  on  an  average  of  two 
permits  per  space;  and, 

b)  the  proposed  lease  modification  which  would  result  in  a 
rent  charged  to  United  Airlines  of  $52.03  monthly  for 
each  of  the  150  parking  spaces  would  be  83.6  percent 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

11 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 

less  than  the  average  $318  monthly  net  revenue  per 
space  which  the  Airport  currently  receives  for  long- 
term  Airport  public  parking. 

12.  The  Budget  Analyst  based  the  above  calculations  on  the 
assumption  that,  under  the  proposed  lease  modification, 
the  United  Airlines  would  be  provided  150  new  parking 
spaces,  based  upon  information  received  from  the  Airport. 
However,  the  Airport  now  advises  that  United  Airlines  will 
receive  a  net  total  of  75  new  parking  spaces  (the  150 
parking  spaces  provided  in  the  subject  2.61  acres  less  75 
parking  spaces  under  the  0.74  acres  which  United  Airlines 
has  agreed  to  relinquish  to  the  Airport  under  the  proposed 
lease  modification.)  However,  this  analysis  by  the  Budget 
Analyst  addresses  the  fair  market  value  of  the  new  space 
that  will  now  be  leased  to  United  Airlines  that  includes  150 
parking  spaces. 


Recommendations:      1.  Amend  the  proposed  resolution  to  provide  for  retroactive 
authorization,  in  accordance  with  Comment  No.  2  above. 

2.  Approval  of  the  proposed  resolution,  as  amended,  is  a 
policy  matter  for  the  Board  of  Supervisors  since  under  the 
proposed  lease  Modification  No.  3,  the  Airport  will  not 
receive  current  fair  market  value  until  July  1,  2003  and,  as 
the  lease  presently  states,  the  Airport  does  not  require 
United  Airlines  to  pay  annual  rent  adjustments  based  on 
annual  percentage  increases  in  the  Consumer  Price  Index 
(CPI)  over  the  entire  potential  40-year  term  of  this  lease.  In 
addition,  the  fair  market  value  rates  of  the  parking  spaces 
to  be  provided  to  United  Airlines  under  the  proposed  lease 
are  considerably  less  than  comparable  parking  rates  that 
could  be  received  for  parking  as  noted  in  Comments  10  and 
11,  above. 

3.  As  requested  by  the  Airport,  continue  this  proposed 
resolution  for  two  weeks,  in  accordance  with  Comment  No. 
9  above. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

12 


Attachment  I 
J^a^e   1   or    2 


AIRPORT  COMMISSION 

SAN  FRANCISCO  INTERNATIONAL  AIRPORT 

CITY  AND  COUNTY  OF  SAN  FRANCISCO 

INTEROFFICE  MEMORANDUM 


TO:  Harvey  Rose  DATE:  January  24, 2001 

Budget  Analyst 

A 

FROM:  Bob  Rhoades     Gc~' 

Deputy  Airport  Director,  Business 

SUBJECT:      Lot  DD  Development  -  MultiModal  Transportation  Center 

Lot  DD  consists  of  a  3,21  S  space  parking  garage  for  Airport  and  tenant  employees  under  Airport 
control.  It  also  contains  a  secure  1,190  space,  paved  parking  lot  under  long-term  lease  throueh 
year  2013  to  United  Airlines  ("UA")  for  UA  employee  parking.  Access  to  the  employee  parking 
garage  is  by  way  of  a  signalized  entry/exit  from  South  Airport  Boulevard.  Access  to  the  UA 
employee  parking  area  is  from  a  separate  signalized  entry/exit  from  South  Airport  Boulevard 
with  an  additional  (stop  si^n  controlled)  exit  onto  westbound  San  Bruno  Avenue.  Shunle  buses 
transport  employees  to  and  from  other  Airport  destinations. 

The  Airport  intends  to  improve  Lot  DD  as  pan  of  a  Multi-Modal  Transportation  Center 
("MMTC")  development.  Under  the  "Transit  First  Policy  adopted  by  the  Airport  Commission 
in  1996,  the  Airport  is  committed  to  the  development  of  a  ground  transportation  system  which 
gives  priority  to  alternate  transit  modes.  As  part  of  this  commitment,  the  development  of  the 
MMTC  at  Lot  DD  would  provide  a  consolidated  transportation  connection  for  long-term  airpon 
parking,  buses,  and  bicyclists,  with  access  to  the  terminal  complex.  Toe  MMTC  would  achieve  a 
number  of  transit  first  objectives,  such  as:   1)  reduce  vehicular  travel  to  and  congestion  on  the 
passenger  terminal  roadways  by  providing  direct  access  via  AirTrain  for  remote  long-term 
parking  sites;  2)  encourage  use  of  public  transit  by  providing  a  direct  connection  between  a  new 
SamTrans  stop  and  AirTrain;  3)  encourage  bicycle  commuting  by  providing  an  extension  of  the 
Bay  Trail,  and  new  bicycle  parking  facilities  with  direct  access  to  the  terminal  complex  via 
AirTrain. 

Lot  DD  improvements  will  involve  an  extension  of  the  AirTrain  System  (the  Airpon  lisht  rail 
system);  two  MMTC  AirTrain  Stations;  construction  of  a  link  of  the  San  Francisco  Bay  Trail- 
and  expansion  of  long-term  parking  facilities.  The  Lot  DD  improvements  are  broken  into  rwo 
phases  for  implementation. 

Phase  I  improvements  include:  paving  an  unimproved  portion  of  the  lot  to  add  aporoximately 
1,600  additional  parking  spaces  to  initially  be  used  by  employees;  signalization  improvements  at 
the  intersections  of  South  Airport  Boulevard  and  the  I-3S0  off  and  on-ramps;  construction  of  the 
Bay  Trail  link  through  Lot  DD;  and  relocation  of  the  parking  lot  exit  onto  San  Bruno  Avenue.  A 
contract  is  currently  underway  to  make  the  first  phase  improvements. 


.     13 


.  (•*■".*'  Attachment    I 

••  'i  ••..-.-  .  fage   2   or    2 

/•• 

Harvey  Rose 
January  24.  2001 
Pas=2 


Phase  TI  improvements  include:  the  extension  of  the  AirTrain  System;  construction  of  a  second 
parking  structure;  and  the  conversion  of  the  employee  parking  lot  and  structures  into  lonp-term 
parking  facilities. 

The  only  viable  vehicular  access  to  the  new  parking  area  being  developed  is  through  the  United 
Airlines'  secure  leasehold  area.  Without  such  access,  the  new  surface  parking  area  being 
developed  in  Phase  I  would  be  unusable,  making  less  long-term  parking  available  in  the  future. 
To  obtain  UA  agreement  to  bisect  their  leasehold  the  Airport  agreed  to  increase  the  UA 
leasehold  to  accommodate  150  additional  parking  spaces  and  to  retain  the  access  onto  San  Bruno 
Avenue  for  the  UA  employees. 

Phase  I  of  the  project  is  now  underway.  The  entire  MMTC,  including  phase  II  improvements,  is 
expected  to  be  complete  within  four  to  six  years. 


14 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 

Item  2  -  File  01-0052 

Note:     This  item  was  continued  by  the  Finance   Committee  at  its  meeting  of 
February  7,  2001. 


Department: 
Item: 


Lessor: 

Lessee: 

Total  Acreage  and 
Cost  Per  Month 
Payable  by  United 
Airlines,  Inc.  to  the 
Airport: 


Purpose  of  Lease: 

Amount  Payable  by 
United  to  Airport: 


Airport  Commission 

Resolution  approving  a  new  lease  agreement  for  Plot  6 
between  United  Airlines,  Inc.  (United)  and  the  City  and 
County  of  San  Francisco,  acting  by  and  through  its 
Airport  Commission 

City  and  County  of  San  Francisco 

United  Airlines,  Inc. 


16.04  acres  at  a  monthly  rental  rate  of  $132,054.65  for  the 
first  and  second  years  of  the  proposed  lease 
(approximately  $8,232.83  per  acre  per  month).  For  the 
first  and  second  years,  annual  rent  would  total 
$1,584,655.76  ($98,794  per  acre  per  year). 

United  will  use  the  16.04  acres  for  an  air  cargo  facility, 
administrative  offices  and  employee  parking. 


$1,584,655.76  per  year  for  the  first  and  second  year  of  the 
lease.  According  to  Ms.  Dorothy  Schimke  of  the  Airport, 
rent  in  the  amount  of  $1,584,655.76  per  year  represents 
the  fair  market  value  of  the  subject  16.04  acres  on  June  1, 
1999,  the  retroactive  effective  date  of  the  proposed  lease. 
Presently,  United  pays  the  Airport  $508,353  under  permit 
for  19.35  acres  (see  Comment  No.  2).  The  proposed  lease 
provides  for  annual  increases  in  the  rent  based  on 
increases  in  the  Consumer  Price  Index  (CPI).  According  to 
the  proposed  lease,  the  CPI  adjustment  would  begin  on 
June  1,  2001.  As  stated  in  the  Attachment  provided  by 
the  Airport,  there  will  be  no  CPI  adjustment  between 
June  1,  1999  and  June  1,  2001,  thereby  resulting  in  no 
CPI  adjustment  for  the  second  year  of  the  lease  between 
June  1,  2000  and  June  1,  2001.  The  lease  requires  United 
Airlines  to  pay  CPI  adjustments  for  the  third,  fourth  and 
fifth  year  of  the  lease.  In  the  sixth  year  of  the  proposed 
lease,  the  annual  rental  payment  to  the  Airport  will  be 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 


Term  of  Lease: 


Right  of  Renewal: 

Maintenance  and 
Operations: 


Description: 


determined  by  a  City  reappraisal  of  the  land  to 
reestablish  the  fair  market  value  amount.  Subsequent 
annual  increases  in  the  rent  will  be  made  based  on 
increases  in  the  CPI  through  the  end  of  the  lease. 

Retroactive  to  June  1,  1999  to  June  30,  2011  (12  years 
and  one  month) 

Lessee  has  no  renewal  rights. 


The  Lessee,  United  Airlines,  Inc.,  pays  for  the  costs  of  all 
maintenance  and  operations. 

The  proposed  resolution  would  authorize  a  new  12  year 
and  one  month  lease  retroactive  to  June  1,  1999  of  16.04 
acres  of  a  newly  configured  Plot  6  to  accommodate 
United's  air  cargo  facility,  some  administrative  offices  and 
employee  parking.  The  16.04  acres  of  a  newly  configured 
Plot  6  would  constitute  approximately  83  percent  of  the 
19.35  acres  of  Plots  5  and  6  covered  under  a  month-to- 
month  permit,  cancelable  on  30-day  notice,  since  the 
expiration  of  original  leases  in  1993.  According  to  Ms. 
Schimke,  United  occupied  the  16.04  acres  from  1993  until 
June  1,  1999  on  a  permit  basis,  instead  of  under  a  lease, 
pursuant  to  the  following  conditions  contained  in  a 
Memorandum  of  Understanding  negotiated  in  the  early 
1990s  between  the  Airport  and  United  Airlines: 

1)  Upon  termination  of  the  leases  of  Plots  5  and  6 
in  1993,  the  leases  would  be  replaced  in  the  interim 
by  month-to-month  permits,  for  the  same  areas  at 
the  same  land  rental  rates  as  were  then  in  effect, 
until  the  land  was  required  for  the  Airport's  Master 
Plan  construction  or  the  functions  were 
accommodated  elsewhere; 

2)  The  Airport  would  offer  United  a  "standard 
lease"  for  that  portion  of  the  site  primarily 
comprising  Plot  6,  for  continued  accommodation  of 
its  air  cargo  facility,  offices  and  related  parking; 

3)  Rent  under  the  interim  permit(s)  would  remain 
at  the  same  rate  as  was  in  effect  upon  termination 
of  the  Plots  5  and  6  leases,  and  would  be  adjusted 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

16 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 

to  fair  market  value  at  the  time  the  new  leases 
were  in  place. 

The  differences  between  the  proposed  lease  for  16.04  acres 
of  a  newly  configured  Plot  6  and  the  existing  month-to- 
month  permit  for  19.35  acres  of  Plots  5  and  6  are  (1)  the 
permit  is  cancelable  upon  30-days  notice,  (2)  the  new 
lease  adjusts  the  rents  as  described  in  Comment  No.  2 
below,  (3)  1.43  acres  have  been  added  to  result  in  a  total 
acreage  of  16.04  acres  for  Plot  6,  which  originally  totaled 
14.61  acres,  and  (4)  Plot  6  has  been  slightly  reconfigured 
due  to  the  Airport's  Master  Plan  construction  program  for 
Boarding  Area  "G"  and  the  Air  Train  (Airport  Light  Rail 
System). 

The  proposed  lease  would  reflect  the  City's 
Administrative  Code  and  other  City  requirements,  such 
as  provisions  requiring  compliance  with  the  ban  on 
tropical  hardwoods  and  virgin  redwood,  the  MacBride 
Principles  related  to  employment  inequity  in  Northern 
Ireland,  the  Non-Discrimination  in  City  Contracts  and 
Equal  Benefits  Ordinance,  and  the  Minimum 
Compensation  Ordinance. 

Comments:  1.   The  Airport  Commission  adopted  Resolution  No.  00- 

0464  on  December  19,  2000,  recommending  the  proposed 
new  lease  to  United  retroactive  to  June  1,  1999.  As  shown 
in  the  Attachment,  the  lease  is  retroactive  to  June  1,  1999 
because  in  June  of  1999,  the  Airport  determined  that  the 
Air  Train  required  adjustments  that  would  encroach  upon 
the  eastern  boundary  of  the  new  Plot  6.  Finalization  of 
the  Plot  6  lease  was  therefore  put  off  until  the  Air  Train 
issues  were  settled  and  a  legal  description  of  the  premises 
could  be  accurately  determined.  Ms.  Schimke  reports  that 
because  these  adjustments  were  minimal,  United  agreed 
to  establishing  an  effective  date  of  June  1,  1999  for  the 
proposed  lease  at  the  then  market  value  rental  rate.  The 
final  configuration  of  the  parcel  incorporating  the  Air 
Train  land  recapture  was  not  defined  and  resolved 
between  the  Airport  and  United  until  November  of  2000. 

2.  According  to  Ms.  Schimke,  the  proposed  lease  of  16.04 
acres  includes  14.61  acres  of  the  old  Plot  6  and  1.43  acres 
of  the  old  Plot  5.  As  previously  noted,  the  annual  rent  for 
the  first  and  second  year  for  the  16.04  acres  would  be 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

17 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 


$1,584,655.76,  a  net  annual  increase  of  $1,076,302.76,  or 
an  increase  of  approximately  211.7  percent,  retroactive  to 
June  1,  1999,  from  the  permit  rent  of  $508,353  payable  by 
United  to  the  Airport  for  the  19.35  acres  of  Plots  5  and  6 
covered  under  permit.  The  new  proposed  lease  pertaining 
to  16.04  acres  would  result  in  a  reduction  of  3.31  acres 
being  leased  by  the  Airport  to  United.  Ms.  Schimke 
reports  that  upon  approval  of  the  proposed  lease  by  the 
Board  of  Supervisors,  United  would  pay  retroactively  to 
the  City  $1,793,838,  representing  the  difference  in  the 
monthly  rental  income  of  $89,691.90  for  the  20  month 
period  from  June  1,  1999,  the  start  of  the  proposed  lease, 
through  January  31,  2001.  The  net  increase  in  rent 
payable  by  United  to  the  Airport  for  the  first  two  years  of 
the  lease  is  calculated  as  follows: 


Approximate  Annual 
Cost  per  Acre 

Total  Acres 

Annual  Airport 
Revenues 

Old  permit:    Plot  5 

$42,000 

4.071 

$170,940 

Plot  6 

$22,082 

15.28 

$337,413 

Subtotal  for  permit 

19.35 

5508,353 

Proposed  new  lease  for 

new  Plot  6  (includes  a 
majority  of  the  acreage 
of  the  old  Plot  6  and  a 
small  parcel  of  the  old 
Plot  5) 

$98,794 

16.04 

$1,584,655.76 

Net  Increase 

51,076,302.76 

3.  The  Budget  Analyst  notes  that  had  the  rent  amount 
for  the  second  year  of  the  proposed  lease  between  June  1, 
2000  and  June  1,  2001  been  adjusted  for  the  increase  in 
the  CPI,  then  the  rent  would  have  increased  by  3.77 
percent  or  approximately  $59,742  to  an  annual  rent  of 
approximately  $1,644,398  instead  of  the  proposed  annual 
rent  of  $1,584,655.76  for  the  second  year  of  the  proposed 
lease. 

4.  Since  the  lease  began  on  June  1,  1999,  the  proposed 
resolution  should  be  amended  to  provide  for  retroactive 
authorization. 


1  Under  the  proposed  lease  for  the  new  Plot  6,  United  will  lease  1.43  acres  of  the  4.07  acres  of 
Plot  5  that  were  under  permit. 

BOARD  OF  SUPERVISORS 

BUDGET  ANALYST 

18 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 

5.  At  the  meeting  of  February  7,  2001  the  Finance 
Committee  requested  the  Airport  Director  to  attempt  to 
renegotiate  this  proposed  new  lease  in  order  to  require 
United  Airlines  to  pay  a  CPI  adjustment  to  the  Airport  for 
the  second  year  of  this  proposed  lease  between  June  1, 
2000  and  June  1,  2001.  As  of  the  writing  of  this  report, 
according  to  Mr.  Peter  Nardoza  of  the  Airport,  the  Airport 
has  not  yet  been  in  contact  with  representatives  of  United 
Airlines  concerning  a  possible  renegotiation  of  this  lease 
as  requested  by  the  Finance  Committee.  Therefore,  Mr. 
Nardoza  is  requesting  that  this  item  be  continued  for  two 
weeks. 

Recommendations:         1.  Amend     the     proposed     resolution    to     provide     for 

retroactive  authorization,  in  accordance  with  Comment 
No.  4  above. 

2.  Approval  of  the  proposed  resolution,  as  amended,  is  a 
policy  matter  for  the  Board  of  Supervisors  because  there 
will  be  no  CPI  adjustment  for  rent  for  the  second  year  of 
the  proposed  lease  between  June  1,  2000  and  June  1, 
2001.  Had  the  rent  amount  being  charged  by  the  Airport 
to  United  Airlines  for  the  second  year  of  the  proposed 
lease  been  adjusted  upward  according  to  the  increase  in 
the  CPI,  the  rent  payable  by  United  to  the  Airport  would 
have  increased  by  approximately  $59,742  to  an  annual 
rent  of  $1,644,398,  instead  of  the  proposed  annual  rent  of 
$1,584,655.76  as  noted  in  Comment  No.  3. 

3.  As  requested  by  the  Airport,  continue  this  proposed 
resolution  for  two  weeks. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

19 


AIRPORT  COMMISSION 

SAN  FRANCISCO  INTERNATIONAL  AIRPORT 

CITY  AND  COUNTY  OF  SAN  FRANCISCO 

MEMORANDUM 


TO: 

FROM: 

SUBJECT:     Plot  6  Lease  -  United  Airlines 


Harvey  Rose 
Budget  Analyst 

BobRhoades  |RL 

Deputy  Airport  Director,  Business 


DATE:      January  25,  2001 


As  discussed  in  the  Budget  Analyst's  report,  the  subject  lease  comprises  one  element  of  a 
complex  series  of  land  exchanges  required  to  implement  the  Airport's  Master  Plan.  The  general 
concept,  negotiated  in  the  early  1 990's,  provided  for  existing  permits  to  remain  in  place,  at  then- 
current  rents,  until  the  land  was  required  for  the  Master  Plan  construction  or  the  functions  were 
accommodated  elsewhere.  It  was  generally  agreed  that  the  Plot  6  lease  would  not  be  finalized 
until  the  parcel  reached  its  final  configuration.  It  was  anticipated  thai  the  plot  would  reach  its 
final  configuration  when  the  Airport  recaptured  a  parking  parcel  in  the  area  now  comprising  a 
portion  of  the  new  Boarding  Area  G  apron. 

The  parking  parcel  was  surrendered  by  United  in  June  1999;  however,  at  that  time  it  became 
apparent  that  the  Air  Train  (Airport  light  rail  system)  guideway  required  adjustments  that  would 
encroach  upon  the  eastern  boundary  of  Plot  6.  The  Plot  6  lease  could  not  be  absolutely  finalized 
until  the  guideway  issues  were  settled  and  legal  description  of  the  premises  could  be  written, 
based  upon  formal  survey.  The  issues  were  finally  resolved  in  late  2000. 

Because  the  guideway  adjustments  were  minimal,  the  parties  agreed  that,  once  approved  by  the 
Board  of  Supervisors,  the  Plot  6  rent  commencement  would  be  retroactive  to  June  1,  1999.  The 
first  CPI  adjustment  will  occur  in  accordance  with  lease  provisions,  once  the  lease  is  actually  in 
place  (after  Board  approval).  The  Base  Index  for  CPI  adjustments  is  defined  as  "the  most  recent 
Consumer  Price  Index  published  immediately  prior  to  the  Commencement  Date,"  or  April  1999. 
The  Comparison  Index  for  the  first  (June  2001)  adjustment  will  be  April  2001 ,  generating  a  two- 
year  value  increase. 


20 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 


Item  3 -File  01-0161 

Department: 

Item: 


Lessor: 


Lessee: 


No.  of  Sq.  Ft.  and 
Rent  Per  Year 
Payable  by  The  Body 
Shop  to  the  Airport: 


Purpose  of  Lease: 


Airport  Commission 

Resolution  approving  a  new  Boarding  Area  "F'  Cosmetic 
and  Toiletries  Lease  between  Buth-Na-Bodhaige,  Inc., 
doing  business  as  The  Body  Shop,  and  the  City  and 
County  of  San  Francisco,  acting  by  and  through  its 
Airport  Commission. 

City  and  County  of  San  Francisco 

Buth-Na-Bodhaige,  Inc.,  doing  business  as  (dba)  The  Body 
Shop 


1,123  sq.  ft.,  located  at  Boarding  Area  "F'  in  the  North 
Terminal  by  Gate  82  at  the  Airport.  The  annual  rent 
payable  by  Buth-Na-Bodhaige,  Inc.,  dba  The  Body  Shop 
(the  proposed  lessee)  to  the  Airport  would  be  the  greater 
of  the  Minimum  Annual  Guarantee  of  $275,001  for  the 
first  year  of  the  proposed  lease  or  a  percentage  of  gross 
revenues  realized  by  the  proposed  lessee.  According  to  the 
proposed  lease,  the  annual  percentage  of  gross  revenues 
payable  by  the  proposed  lessee  to  the  Airport  would  be  12 
percent  of  gross  revenues  up  to  and  including  $500,000, 
plus  14  percent  of  gross  revenues  from  $500,000.01  up  to 
and  including  $1,000,000,  plus  16  percent  of  gross 
revenues  over  $1,000,000.  The  proposed  lease  provides  for 
annual  increases  in  the  Minimum  Annual  Guarantee 
based  on  increases  in  the  Consumer  Price  Index. 

The  proposed  lessee  will  use  the  1,123  sq.  ft.  of  space  to 
display  and  sell,  on  a  non-exclusive  basis,  retail 
merchandise  generally  found  in  a  cosmetic  and  toiletries 
store. 


Term  of  Lease:  January  7,  2001  through  January  6,  2006  (five  years) 

Right  of  Renewal:  Lessee  has  no  renewal  rights. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

21 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 

Utilities  and 
Janitorial  Services: 


The  lessee  pays  for  the  costs  of  all  utilities  and  janitorial 
services. 


Tenant 
Improvements: 


Description  of 
Proposed  Lease: 


Comments: 


According  to  Ms.  Cathy  Widener  of  the  Airport,  the 
proposed  lessee  would  be  required  to  pay  for  tenant 
improvements  to  the  1,123  sq.  ft.  of  leased  space,  at  a 
minimum  cost  to  the  lessee  of  $250  per  sq.  ft.,  or 
$280,750. 

The  proposed  resolution  would  authorize  a  new  five  year 
lease  of  1,123  sq.  ft.  at  Boarding  Area  "F'  next  to  Gate  82 
to  accommodate  The  Body  Shop  is  a  retail  concession 
which  sells  cosmetic  and  toiletries.  According  to  Ms. 
Widener,  the  proposed  lessee  occupied  1,423  sq.  ft.  at  the 
Airport  from  December  1,  1995  through  January  6,  2001 
under  a  prior  lease.  The  1,123  sq.  ft.  of  space  under  the 
proposed  lease  constitutes  approximately  79  percent  of 
the  1,423  sq.  ft.  of  space  covered  under  the  prior  lease. 
Ms.  Widener  reports  that  the  reduction  of  300  sq.  ft.  of 
space  is  a  result  of  reconfiguring  a  portion  of  the  original 
space  to  accommodate  another  concession  under  a 
separate  lease  which  will  not  be  subject  to  future  approval 
by  the  Board  of  Supervisors,  as  noted  in  City  Charter 
Section  9.118,  because  the  Airport  space  will  be  leased  at 
a  rental  amount  totaling  under  $1,000,000  for  the  five 
year  term  of  the  lease. 

1.  According  to  Ms.  Widener,  the  proposed  lease  of  1,123 
sq.  ft.  would  result  in  a  reduction  of  300  sq.  ft.  of  space 
previously  leased  to  the  proposed  lessee  at  the  Airport. 
The  Minimum  Annual  Guarantee  of  the  prior  lease  was 
$152,412.94.  The  net  increase  in  Minimum  Annual 
Guarantee  payable  by  the  proposed  lessee  to  the  Airport 
is  calculated  as  follows: 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

22 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 


Approximate  Monthly 
Cost  per  Sq.  Ft. 

Total  Sq.  Ft. 

Approximate  Annual 
Airport  Revenues 

Old  lease 

$8.93 

1,423 

$152,412.94  Minimum  Annual 
Guarantee  or  15  percent  of  gross 
revenues,  whichever  was  greater 

Proposed  new 
lease 

$20.41 

1,123 

$275,001  Minimum  Annual 

Guarantee  or  12  percent  of  gross 

revenues  up  to  and  including 

$500,000;  plus  14  percent  of 

gross  revenues  from  $500,000.01 

up  to  and  including  $1,000,000; 

plus  16  percent  of  gross 

revenues  over  $1,000,000, 

whichever  is  greater 

Net  Increase  in  Minimum  Annual  Guarantee 
Payable  to  the  Airport 

$122,588.06/ 

2.  Since  the  lease  began  on  January  7,  2001,  the 
proposed  resolution  should  be  amended  to  provide  for 
retroactive  authorization. 

3.  According  to  Ms.  Widener,  on  October  5,  2000  the 
Airport  issued  Invitations  to  Bid  to  31  firms  for  the 
subject  space.  The  Airport  received  the  following  two  bids 
for  this  lease:  (1)  Buth-Na-Bodhaige,  Inc.,  the  existing 
lessee,  dba  The  Body  Shop  with  a  Minimum  Annual 
Guarantee  of  $275,001,  and  (2)  Meritage  Skin  Care  with  a 
Minimum  Annual  Guarantee  of  $249,660.  On  December 
19,  2000,  the  Airport  Commission  approved  the  proposed 
lease  of  space  to  the  proposed  lessee.  The  bid  item,  as 
required  of  the  Airport,  was  the  Minimum  Annual 
Guarantee.  The  percentages  of  gross  revenues  as 
identified  on  the  first  page  of  this  report  were  required  by 
the  Airport  from  all  bidders. 

4.  The  gross  revenues  achieved  by  the  proposed  lessee 
would  need  to  exceed  $1,906,2561  for  the  Airport's 
percentage  revenues  from  the  proposed  lease  to  exceed  the 
Minimum  Annual  Guarantee  of  $275,001. 


1  $1,906,256  was  calculated  in  the  following  manner:  first  $500,000  gross  revenues  realized  by  the 
proposed  lessee  at  12  percent  ($60,000),  plus  second  $500,000  gross  revenues  realized  by  the 
proposed  lessee  at  14  percent  ($70,000),  plus  gross  revenues  over  $1,000,000,  totaling  $906,256, 
realized  by  the  proposed  lessee  at  16  percent  ($145,001).  $60,000  plus  $70,000  plus  $145,001  equals 
the  Minimum  Annual  Guarantee  of  $275,001. 

BOARD  OF  SUPERVISORS 

BUDGET  ANALYST 

23 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 

5.  Ms.  Widener  reports  that  actual  rental  revenues  paid 
to  the  Airport  under  the  prior  lease  totaled  $1,147,810  in 
Calendar  Year  (CY)  1996,  $1,174,742  in  CY  1997, 
$1,245,882  in  CY  1998,  and  $1,216,148  in  CY  1999.2 
Based  on  the  actual  rent  of  $1,216,148  paid  by  the  lessee 
in  CY  1999,  the  lessee  earned  gross  revenues  of 
$8,107,6533  in  1999.  Although  the  Airport  has  not 
estimated  the  proposed  lessee's  gross  revenues  for  the 
year  2001,  if  the  $8,107,653  in  gross  revenues  realized  by 
the  lessee  in  CY  1999  were  sustained  in  the  future 
(recognizing  that  the  new  lease  is  300  sq.  ft.  less  than  the 
prior  lease),  the  Airport  would  receive  rental  revenues  of 
$1,267,2244  annually  under  the  new  lease,  an  increase  of 
$51,076  or  4.2  percent  over  the  prior  lease  which 
contained  300  more  sq.  ft.  However,  the  percentage 
increase  in  rent  of  the  proposed  lease  over  the  prior  lease 
will  grow  if  the  proposed  lessee's  gross  revenues  increase 
in  the  future  because  the  marginal  rent  paid  by  the 
proposed  lessee  to  the  Airport  will  be  based  on  16  percent 
of  lessee's  gross  revenue  over  $1,000,000  instead  of  15 
percent  under  the  prior  lease. 

6.  As  previously  noted,  irrespective  of  the  gross  revenues 
realized  by  the  lessee,  the  Airport  will  be  paid  an  increase 
in  the  Minimum  Annual  Guarantee  for  the  proposed  new 
lease  of  $122,588.06  for  a  lease  which  contains  300  less 
sq.  ft.  over  the  Minimum  Annual  Guarantee  paid  under 
the  prior  lease. 

Recommendations:  1.  Amend     the     proposed     resolution    to     provide     for 

retroactive  authorization,  in  accordance  with  Comment 
No.  2  above. 

2.   Approve  the  proposed  resolution,  as  amended. 


2  To  date,  figures  for  actual  lease  revenue  from  CY  2000  are  not  available. 

3  $8,107,653  was  calculated  by  dividing  $1,216,148  in  lease  revenue  in  CY  1999  by  15 
percent,  which  was  the  percentage  of  rent  required  under  the  prior  lease. 

4  $1,267,224,  the  potential  future  lease  revenue,  was  calculated  taking  the  sum  of  the 
following:  12  percent  of  the  first  $500,000  gross  revenues  realized  by  the  proposed  lessee 
($60,000),  plus  14  percent  of  second  $500,000  gross  revenues  realized  by  the  proposed  lessee 
($70,000),  plus  16  percent  of  $7,107,653  gross  revenues  realized  by  the  lessee  ($1,137,224). 
$60,000  plus  $70,000  plus  $1,137,224  equals  $1,267,224. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

24 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 

REVISED     2/16/01 
Item  3 -File  01-0161 


5.  Ms.  Widener  reports  that  gross  rental  revenues 
realized  by  The  Body  Shop  under  its  prior  lease  totaled 
$1,245,882  in  1998  and  $1,216,148  in  19992.  Ms.  Widener 
further  reports  that,  based  on  15  percent  of  gross 
revenues  under  the  prior  lease,  the  lease  revenues  paid  by 
the  lessee  to  the  Airport  for  the  12  months  ending 
November  30,  1998  totaled  $186,882,  and  for  the  12 
months  ending  November  30,  1999  totaled  $182,623.  The 
15  percent  of  gross  revenue  under  the  prior  lease  exceeded 
the  Minimum  Annual  Guarantee  of  $152,412.94  by 
$34,469  in  1998  and  $30,210  in  1999.  Ms.  Widener 
reports  that  the  Airport  has  not  estimated  gross  revenues 
under  the  proposed  new  lease  for  2001  and  therefore  has 
not  calculated  revenues  payable  to  the  Airport  based  on 
the  percentage  of  gross  revenues  under  the  new  lease.  As 
previously  noted  such  percentages  range  from  12  percent 
to  16  percent. 

6.  Irrespective  of  the  gross  revenues  realized  by  the 
lessee  under  the  proposed  new  lease,  the  Airport  will  be 
paid  an  increase  in  the  Minimum  Annual  Guarantee  for 
the  proposed  new  lease  of  $122,588.06  for  a  lease  which 
contains  300  less  sq.  ft.  over  the  Minimum  Annual 
Guarantee  paid  under  the  prior  lease.  Further,  the 
Minimum  Annual  Guarantee  of  $275,001  under  the 
proposed  new  lease  exceeds  the  rent  paid  to  the  Airport 
for  the  12  month  ending  November  30,  1999  by  $92,378 
($275,001  less  $182,623). 

Recommendations:  1.  Amend     the     proposed     resolution     to     provide     for 

retroactive  authorization,  in  accordance  with  Comment 
No.  2  above. 

2.   Approve  the  proposed  resolution,  as  amended. 


2  To  date,  figures  for  gross  revenue  from  2000  are  not  available. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

24 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 


Item  4 -File  01-0061 

Department: 

Item: 


Description: 


Department  of  Public  Health  (DPH) 

Ordinance  adding  Section  10.117-126  to  the  San 
Francisco  Administrative  Code,  establishing  a  fund  for 
deposit  of  sums  received  under  the  Substance  Abuse  and 
Crime  Prevention  Act  of  2000  and  designating  the 
Department  of  Public  Health  as  the  lead  agency  for 
administration  of  the  fund. 

On  November  7,  2000,  California  voters  approved 
Proposition  36,  the  Substance  Abuse  and  Crime 
Prevention  Act  of  2000.  The  Act  requires  that  certain 
non-violent  drug  possession  offenders  receive  drug 
treatment  services  in  the  community  rather  than 
incarceration.  The  California  Department  of  Alcohol  and 
Drug  Programs  has  allocated  funds  for  counties  to  receive 
upon  compliance  with  qualifying  terms  of  the  Act.  To 
qualify  for  funds,  the  Substance  Abuse  and  Crime 
Prevention  Act  of  2000  requires  counties  to  (1)  establish  a 
trust  fund  to  deposit  and  account  for  the  sums  received 
under  the  Act,  and  (2)  designate  a  lead  agency  to 
administer  implementation  of  the  Act. 

The  proposed  ordinance  would  establish  a  trust  account 
for  the  purpose  of  receiving  and  accounting  for  State 
funds  from  the  Substance  Abuse  and  Crime  Prevention 
Act  of  2000,  in  accordance  with  Proposition  36,  and  would 
designate  DPH  as  the  lead  agency  for  implementation  of 
the  Act. 


Comments: 


1.  According  to  Ms.  Monique  Zmuda  of  DPH,  the  State 
intends  to  allocate  $58.8  million  in  start-up  funds  in  FY 
2000-2001  to  various  counties  throughout  California,  and 
$117.6  million  annually  to  those  same  counties  from  FY 
2001-2002  through  FY  2005-2006  for  continued 
implementation  of  the  Act.  According  to  Ms.  Zmuda,  San 
Francisco  would  receive  $2,300,665  in  FY  2000-2001 
start-up  funding  and,  beginning  FY  2001-2002,  an 
estimated  $4.6  million  in  funds  annually  through  FY 
2005-2006.  Expenditure  of  such  funds  would  be  subject  to 
appropriation  approval  by  the  Board  of  Supervisors.  The 
Attachment  to  this  report  contains  a  list  of  the  State's 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

25 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 


proposed  start-up  allocations  to  each  of  the  counties  in 
California  that  would  receive  funding  for  FY  2000-2001. 
All  such  funds  are  to  be  used  to  provide  non-violent 
offenders  who  are  in  possession  of  drugs  with  drug 
treatment  services  in  the  community  instead  of 
incarceration. 

2.  According  to  Ms.  Zmuda,  the  initial  $2.3  million  start- 
up allocation  from  the  State  to  the  City  and  County  of  San 
Francisco  would  need  to  be  allocated  to  City  departments 
by  the  Board  of  Supervisors  through  supplemental 
appropriations.  Ms.  Zmuda  states,  however,  that 
following  the  start-up  period  of  the  remainder  of  FY  2000- 
2001,  all  of  the  subject  State  funds  would  become  a  part  of 
the  regular  departmental  annual  budgets,  subject  to 
appropriations  approval  by  the  Board  of  Supervisors. 
Additionally,  funds  not  spent  in  any  given  year  would  be 
carried  forward  to  subsequent  Fiscal  Years,  states  Ms. 
Zmuda.  According  to  Ms.  Zmuda,  while  it  is  clear  at  this 
time  that  a  large  portion  of  these  funds  would  need  to  be 
allocated  to  the  DPH  budget,  it  has  not  yet  been 
determined  how  funds  would  be  apportioned  among 
departments.  However,  as  previously  noted  the  Board  of 
Supervisors  would  have  final  appropriations  approval  of 
such  funds. 

Ms.  Zmuda  notes  that  the  California  Department  of 
Alcohol  and  Drug  Programs  has  recommended  that 
counties  receiving  Substance  Abuse  and  Crime  Prevention 
Act  of  2000  funds  designate  their  respective  departments 
of  public  health  as  the  lead  agency.  Ms.  Zmuda  states 
that,  because  of  this  recommendation,  and  because  public 
health  departments  will  ultimately  be  the  agencies 
providing  substance  abuse  counseling  as  required  by  the 
Act,  the  California  Department  of  Drug  and  Alcohol 
expects  that  most  if  not  all  counties  receiving  funds  will 
designate  their  respective  departments  of  public  health  as 
lead  agencies,  as  is  the  case  in  San  Francisco. 

3.  Ms.  Zmuda  states  that  all  costs  of  implementation  of 
Substance  Abuse  and  Crime  Prevention  Act  of  2000, 
including  administrative  and  programmatic  costs,  would 
be  fully  paid  for  by  the  funds  allocated  by  the  State  to  the 
City  and  County  of  San  Francisco.     According  to  Ms. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

26 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 


Zmuda,  the  portion  of  the  funds  that  would  be  spent  to 
cover  administrative  costs  rather  than  programmatic 
costs  has  not  yet  been  determined.  However,  all  such 
administrative  and  programmatic  costs  would  be  subject 
to  appropriation  approval  by  the  Board  of  Supervisors. 


Recommendation:  Approve  the  proposed  resolution. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

27 


FY  2000-01  Substance  Abuse  Treatment  Trust  Funds 
Allocation  of  $58,781,147 


Attachment 


Numbor"  of 

Amount 

Number"-* 

Amount 

. 

January  1 

Standard 

F*lony 

of  Fund* 

et 

of  Funds 

Total 

County 

2000 

Methodology 

Drug  Arrest, 

Baaed 

Treatment 

Based 

Allocation 

Population' 

Allocation™ 

Iflsdtmtanor 

on  Arrests 

Caseload 

on  Caseload 

Drug  Amite 

ALAMEDA 

1,454,300 

$1.140412 

13,424 

S8S2488 

4.167 

$759418 

:.-:.■  1 

ALPINE 

1,190 

S74.350 

43 

$2,729 

2 

$365 

177.4*4 

HOOCH 

34,400 

$88,726 

164 

$10,410 

40 

$7,294 

$116,429 

BUTTE 

204,000 

S223410 

995 

S63.1S8 

471 

$85,883 

$372^30 

CALAVERAS 

38.500 

S101.73S 

259 

$16,440 

152 

$27,716 

$145491 

COLUSA 

1B.7S0 

$87,239 

216 

$13,711 

135 

$24,616 

$125565 

CONTRA  COSTA 

930,000  ♦. 

$750,083 

5.879 

$373,170 

2.308 

$420,845 

S1.550.0S7 

DEL  NORTE 

26,000 

$94,028 

148 

$9,394 

138 

$25,163 

5128586 

ELDORADO 

152,900 

$165,703 

727 

$46,146 

320 

$58,349 

$290,199 

FRESNO 

605,000 

$664,335 

£.889 

$373404 

2,572 

$458,043 

S1.4M.1B2 

GLENN 

27,100 

S  S3 .366 

159 

S10.0S3 

79 

$14,405 

$117465 

HUMBOLDT 

127,600 

$167,133 

762 

$48,368 

170 

$30,998 

$248,490 

KiPERlAL 

145,300 

$160,125 

1.917 

$121462 

312 

$56,891 

$358467 

INYO 

18,200 

$86,635 

110 

$8,982 

.65 

S1S.40C 

S10941C 

KERN 

658.900 

$557,100 

6,402 

$406,367 

1.267 

$231,027 

$1,194,483 

KINGS 

131.200 

$160,776 

652 

$41488 

161 

$29,357 

$24051* 

LAKE 

55,700 

$114,360 

4U 

$26,279 

199 

$36486 

$178424 

LASSEN 

33,950 

$98,396 

75 

$4,761 

147 

$26,804 

$129460 

LOS  ANGELES 

9,804,300 

$7,328,414 

58.636 

$1,734,615 

25.666 

$4,679,983 

$15,743  J)  11 

MADERA 

117,100 

$159,426 

400 

$25,390 

233 

$42,486 

$227,302 

MAWN 

249,700 

$256,753 

680 

$43,163 

504 

$91,900 

$30151* 

UARIPOSA 

16.150 

$85,331 

87 

$5,522 

60 

$10,941 

$101,793 

MENDOCINO 

87.600 

$137,774 

761 

$48404 

258 

$47,044 

$233,122 

MERCED 

210,100 

$227,687 

1.420 

$90,134 

276 

$50,326 

$368,148 

MODOC 

9.000 

$80,670 

57 

$3,618 

41 

$7,476 

$91,764 

MONO 

10.900 

$81,477 

37 

$2449 

187 

$34,098 

JI17.S34 

MONTEREY 

399,300 

$366457 

2.126 

$134,948 

567 

$103,388 

$804,19] 

NAPA 

127.000 

$166,693 

492 

$31,230 

312 

$58,891 

J254J13 

NEVADA 

91.100 

$140,343 

274 

$17492 

190 

$34,645 

$192480 

ORANGE 

2.828.400 

$2,149,482 

16.515 

$1.048490 

4,353 

$793,734 

$3491405 

PLACCR 

234.4O0 

$245,523 

1.1  SS 

$73,314 

654 

$119452 

$438,088 

PLUMAS 

20.350 

$88,413 

71 

$4407 

215 

$39404 

$132,123 

RIVERSIDE 

1,522.900 

$1,191,264 

9,029 

$573,116 

1.9SO 

$355567 

$3.119448 

SACRAMENTO 

1,209,500 

$961,232 

S.0O2 

$571,402 

3.169 

5577.64 1 

$2.1 10.475 

SAN  BENITO 

49,800 

$110,029 

140 

$8486 

42 

$7,658 

$12*474 

SAN  BERNARDINO 

1.689,300 

$1,313,399 

14.680 

$931,813 

2.943 

$536,632 

$2.7)1443 

SAN  DIEGO 

2,911,500 

$2,210,476 

21,448 

$1,361,412 

5.325 

$970,97C 

$44*2457 

SAN  FRANCISCO 

801,400 

$661,630 

10,679 

$677448 

5471 

$961,124 

$2400465 

SAN  JOAQUIN 

566,600 

$489,353 

3.409 

$216,38€ 

1.465 

$267,131 

$972470 

SAN  LUIS  OBISPO 

245,200 

$253.45C 

1.140 

$72,361 

410 

$74.76£ 

$400471 

SAN  MATEO 

730.000 

$60948€ 

3,216 

$204.13« 

1,565 

$285.36J 

$1498.786 

SANTA  BARBARA 

414,200 

$377,494 

2,672 

$169,60; 

2.250 

$410.26! 

$957488 

SANTA  CLARA 

1,736.700 

$1.348.t9C 

10.573 

S671.12 

2.610 

$475.91; 

$2.495223 

SANTA  CRUZ 

255.000 

$260,54: 

2,138 

S135.7K 

)           595 

S108.49 

1                    $504446 

SHASTA 

167,000 

$196,05: 

1.461 

$32,73 

'            271 

$46,41 

I                     tVULTni 

SIERRA 

3.140 

$75.78 

23 

$1,461 

)            46 

$8.36! 

$85529 

SISKIYOU 

44.200 

$105.91 

9            255 

$16,181 

5             397 

$72.39 

$194,494 

SOLANO 

399.000 

$366.33 

r            2.360 

$149,80 

1             594 

$108.31 

1                         $824,449 

SONOMA 

450.100 

$403.84- 

1           2.772 

$172,14- 

»           1.533 

$279.53 

3                     $8S5519 

STANISLAUS 

441.400 

$397,45! 

9            3.528 

$22344 

3            625 

$113.96 

1                       $735481 

SUTTER/YUBA 

138.600 

$175.20 

T           1J02S 

$65.06 

2            435 

$79.31 

:-|                    $319588 

TEHAMA 

56,200 

$114.72 

T            292 

$1843 

5             193 

$35.19 

2                     S164..4U 

TRINITY 

13,050 

$83.05 

5             113 

$7.17 

3             74 

$13.49 

:                     $103,721 

TULARE 

368,000 

$343,58 

3           3,745 

$23746 

8             683 

$12444 

0                       $706,090 

TUOLUMNE 

53.000 

$11247 

B             152 

$9.64 

8             160 

$29.17 

$151300 

VENTURA 

756.500 

$628.73 

7           5.315 

$337,37 

0           1.245 

$227.01 

6                   $1,193,122 

YOLO 

162.900 

$193.04 

3            1,256 

$79.72 

5            560 

$102.11 

2                     $374579 

[STATEWIDE  TOTA 

L    34.336.380 

I     S29.390.57 

\           231,513 

$14,695.28 

7             80.5S2 

$14,695.23 

S58.781.147 

I 

"  B*«*  «*  rtrmnom  PoeuUUon  ExlmalM  for  January  1 ,  3000. 

"  Standard  methodology  S2400  p«r  $  1  million  Increase.  Ine  remainder  distributed  per  capita. 

"~  D«pL  of  Justice.  Adult  Drug  Arrests.  1999. 

****  DepL  of  Alcohol  and  Drug  Programs,  California  Alcohol  and  Drug  Data  System,  based  on  the  number  of  persons  in  treatment  on  November  1.1999, 


28 


Memo  to  Finance  Committee 

February  21,  2000  Finance  and  Labor  Committee  Meeting 


Item  5  -  File  01-0272 
Item: 

Amount: 
Source  of  funds: 
Description: 


Comment: 


Recommendation: 


Supplemental  appropriation  ordinance  in  the  amount  of 
$100,000  for  disaster  relief  in  El  Salvador. 

$100,000 

General  Fund  Reserve 

On  January  13,  2001  an  earthquake  measuring  7.6  on  the 
Richter  scale  occurred  in  El  Salvador  reportedly  killing 
over  800  persons  and  leaving  thousands  homeless.  On 
February  13,  2001  a  second  earthquake  measuring  6.6  on 
the  Richter  scale  struck  El  Salvador.  As  of  the  writing  of 
this  report,  news  reports  state  that  274  persons  have  been 
found  dead,  over  2,000  have  been  injured  and  over  15,000 
homes  have  been  destroyed. 

The  proposed  supplemental  appropriation  would  commit 
$100,000  for  disaster  relief  in  El  Salvador. 

According  to  the  Office  of  the  Sponsor  of  the  proposed 
ordinance,  an  appropriate  entity  for  receipt  of  the  disaster 
relief  contribution  has  not  yet  been  identified.  It  is  the 
expectation  of  the  Office  of  the  Sponsor  that  such  a 
recipient  will  be  identified  by  the  Board  of  Supervisors 
meeting  of  Tuesday,  February  20,  prior  to  the  Finance 
Committee  meeting  of  February  21. 

According  to  Mr.  Steve  Kawa  of  the  Mayor's  Office,  the 
disaster  relief  contribution  would  be  disbursed  through 
the  Mayor's  Office  of  Economic  Development  (MOED).  Mr. 
Kawa  adds  that  MOED  would  be  responsible  for  assuring 
that  the  funds  are  contributed  to  an  appropriate  disaster 
relief  organization  and  used  for  the  intended  purpose  of 
providing  relief  for  the  El  Salvador  earthquake  victims. 

In  October  of  1999,  the  Board  of  Supervisors  approved  an 
appropriation  of  $250,000  for  earthquake  relief  efforts  in 
the  City  of  Taipai.  Also,  in  1995,  $50,000  was 
appropriated  by  the  Board  of  Supervisors  for  earthquake 
relief  in  the  City  of  Osaka  following  the  Kobe  earthquake. 

Approval  of  the  proposed  ordinance  is  a  policy  matter  for 
the  Board  of  Supervisors. 


BOARD  OF  SUPERVISORS 

BUDGET  ANALYST 

29 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 

Item  6  -  File  01-0108 


Note:  This  item  was  severed  from  File  No.  00-2087  and  continued  by  the  Finance 
and  Labor  Committee  at  its  meeting  of  January  17,  2001,  with  a  request  by 
the  Committee  that  the  Assessor-Recorder  attempt  to  reduce  the  contract 
with  KPMG  and  instead  complete  the  some  of  the  contract  work  in-house. 


Department: 
Item: 


Amount: 
Source  of  Funds: 
Description: 


Assessor-Recorder's  Office 

Ordinance  appropriating  $726,726  from  the  General  Fund 
Reserve  to  fund  a  contract  with  KPMG  to  design  and 
implement  a  reengineering  plan  for  the  Assessor-Recorder's 
Office  for  Fiscal  Year  2000-01 

$726,726 

General  Fund  Reserve 

The  proposed  supplemental  appropriation  for  $726,726 
was  for  the  purpose  of  expanding  an  existing  $400,000 
contract  with  KPMG  to  develop  and  implement  a 
reengineering  plan,  and  assist  in  reducing  the 
Department's  backlog  in  the  processing  of  deeds  for  a  total 
contract  cost  of  $1,126,726,  for  the  Assessor-Recorder's 
Office  for  Fiscal  Year  2000-01.  This  reengineering  plan 
analyzes  the  department's  work  processes  in  order  to 
identify  changes  the  department  must  make  to  run  more 
effectively.  Ms.  Onyemem  advises  that  the  Assessor- 
Recorder's  Office  originally  contracted  with  KPMG,  in 
consultation  with  the  Mayor's  and  Controller's  Offices,  in 
June  of  2000  to  improve  efficiencies  in  the  department. 
KPMG  agreed  to  identify  and  re-engineer  process 
inefficiencies,  conduct  a  training  needs  assessment, 
provide  necessary  training,  improve  customer  service  and 
help  the  department  transition  into  a  new  computer 
system.  The  Assessor-Recorder's  Office  included  $400,000 
in  its  FY  2000-01  budget  for  this  KPMG  contract.  Ms. 
Onyemem  advises  that  the  Assessor-Recorder's  Office 
negotiated  with  the  Controller's  Office  to  include  this 
$400,000  contract  within  a  larger  City  contract  with 
KPMG  (discussed  further  in  Comment  No.  3  below). 

According  to  Ms.  Onyemem,  in  September  of  2000,  and 
again  in  October  of  2000,  the  Assessor-Recorder's  Office 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

30 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 


requested  that  KPMG  revise  and  expand  the  scope  of  its 
work  plan  in  the  three  ways  listed  below.  The  Budget 
Analyst  notes  that  the  Assessor-Recorder's  Office  did  have 
authority  to  request  from  KPMG  proposals  for  expanding 
the  scope  of  the  existing  $400,000  contract.  However,  the 
Assessor-Recorder's  Office  did  not  have  the  authority  to 
finalize  the  expanded  contract  discussed  below  without 
first  obtaining  approval  from  the  Board  of  Supervisors  of 
this  subject  additional  appropriation  of  $726,726. 

As  reported  to  the  Finance  and  Labor  Committee  on 
January  17,  2001,  this  request  of  $726,726  was  for  the 
following  three  KPMG  projects: 

(1)  After  KPMG  and  the  Assessor-Recorder's  Office  agreed 
to  the  terms  of  the  original  $400,000  contract,  in 
September  of  2000  the  Assessor-Recorder's  Office 
directed  KPMG  to  help  manage  and  facilitate  the 
reduction  of  the  department's  backlog  in  processing 
deeds,  a  priority  for  the  Assessor-Recorder's  Office.  The 
proposed  expanded  work  plan  would  expand  the 
original  contract  by  $207,926  to  reduce  the  Assessor- 
Recorder's  backlog  in  processing  deeds. 

(2)  KPMG  also  agreed  to  expand  the  scope  of  its  contract 
with  the  Assessor-Recorder's  Office  at  a  cost  of 
$172,664  for  the  expanded  scope  management  plan. 
This  expanded  scope  focuses  on  developing  a  new 
management  strategy  and  reorganizing  the 
department. 

(3)  Finally,  KPMG  was  to  implement  a  reengineering  plan 
for  the  Assessor-Recorder  at  a  cost  of  $346,136. 

These  three  component  costs  of  (a)  $207,926,  (b)  $172,664 
and  (c)  $346,136  totaled  $726,726,  the  subject  of  this 
request  and  together  with  KPMG's  existing  contract  of 
$400,000  to  assist  the  Assessor,  the  total  contract  with 
KPMG  would  have  been  $1,126,726. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

31 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 


A    summary    budget    for    the    total    originally    proposed 
contract  costs  of  $1,126,726  with  KPMG  were  as  follows: 


SUMMAKY 

Reengineering  Plan 
Original  Budget 
Expanded  Scope/Deed  Backlog 

$400,000 
207,926* 

Revised  Subtotal 

$607,926 

Expanded  Scope/Management  Plan 
Implementation  of  Reengineering  Plan 

172,664* 
346,136* 

Total  Contract  Costs 

$1,126,726 

*Total  of  $726,726,  which  is  the  subject  of  this  request. 

As  shown  in  the  table  on  the  following  page,  the  hourly 
rage  being  charged  by  KPMG  ranges  from  $121.28  to 
$281.14. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

32 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 


Budget  for 
Reengineering  Plan: 


The  budget  for  the  originally  proposed  $1,126,726  contract 
with  KPMG,  including  the  subject  $726,726  supplemental 
appropriation,  is  as  follows: 


Contract  with  KPMG 

Hourly 
Rate 

Number 
of  Hours 

Total 

Reengineering  Plan 

Professional  Fees 

Managing  Director 
Project  Manager 
Senior  Consultants 
Consultants 
Analysts 
Sub-contractor 

Subtotal  Professional  Fees 
Deed  Backlog  Completion 
Professional  Fees 

Managing  Director 
Project  Manager 
Senior  Consultants 
Analysts 

Subtotal  Professional  Fees 
Total  Professional  Fees 
KPMG's  Otber  Expenses* 

$281.14 
$165.38 
$148.84 
$148.84 
$148.84 
$121.28 

$281.14 
$165.38 
$148.84 
$148.84 

32 
418 
408 
492 
504 

36 

8,997 
69,129 
60,727 
73,229 
75,016 

4,366 

1,890 

8 
422 
904 

144 

$291,464 

2,249 

69,790 

134,551 

21,433 

1,478 
3,368 

$228,023 

519,487 

88,439 

**Subtotal  Reengineering/Backlog 

3,368 

$607,926 

Expanded  Scope/Management  Plan 

Professional  Fees 

Managing  Director 

Project  Manager 

Senior  Consultants 

Subtotal  Professional  Fees 
KPMG's  Other  Expenses 

$281.14 
$165.38 
$148.84 

240 
320 

200 

$67,474 
52,922 
29,768 

760 

$150,164 
22,500 

**Subtotal  Management  Plan 

760 

$172,664 

Estimates  for 

Implementation  of  Reengineering  Plan 

Professional  Fees 

Managing  Director 

Project  Manager 

Senior  Consultants 

Analysts 

Subtotal  Professional  Fees 
KPMG's  Other  Expenses 

$281.14 
$165.38 
$148.84 
$148.84 

200 

400 
400 
800 

$56,228 
66,152 
59,536 

119,072 

1,800 

$300,988 
45,148 

Subtotal  Implementation  Estimates 

1,800 

$346,136 

Total  KPMG  Contract 

5,928 

$1,126,726 

Less  $400,000  included  in  FY  2000-01  Budget 

(400,000) 

Total  Supplemental  Appropriation 

$726,726 

*  Other  Expenses  include  mileage,  parking,  meals  and  housing. 
**  Already  expended  or  incurred  (See  Comment  No.  1  below). 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

33 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 


Comments  on 

Reengineering  Plan:  1.  Of  this  total  subject  request  of  $726,726,  according  to 
Ms.  Onyemem,  KPMG  has  completed  its  work  and 
incurred  expenses  for  the  first  two  components  of  this 
subject  request,  namely  $207,926  for  reducing  the 
Assessor's  backlog  in  processing  deeds,  and  $172,664  for 
the  expanded  scope  management  plan.  Therefore  of  this 
total  subject  request  of  $726,726  KPMG  has  already 
incurred  expenditures  of  $380,590. 

2.  The  Budget  Analyst  notes  that  the  Assessor's  Office 
has  incurred  these  additional  costs  of  $380,590  without 
first  obtaining  prior  appropriation  approval  by  the  Board 
of  Supervisors.  The  Assessor-Recorder's  Office  did  not 
have  the  authority  to  finalize  an  expanded  contract  with 
KPMG  for  such  additional  expenditures  without  first 
obtaining  prior  appropriation  approval  by  the  Board  of 
Supervisors.  Therefore,  the  Budget  Analyst  recommends 
that  the  proposed  ordinance  be  amended  to  provide  for 
retroactive  authorization. 

3.  According  to  Ms.  Onyemem,  the  Assessors  Office 
negotiated  with  the  Controller's  Office  to  include  the 
original  $400,000  contract  with  KPMG  within  a  larger 
City  contract  with  KPMG  in  order  to  begin  a 
reengineering  of  the  department's  business  practices  as 
soon  as  possible.  According  to  Mr.  Hymel  of  the 
Controller's  Office,  additional  services  being  performed 
by  KPMG  are  being  done  under  the  Controller's  City- 
wide  audit  contract  with  KPMG.  Mr.  Hymel  advises  that 
this  contract,  which  was  competitively  bid  and  approved 
by  the  Civil  Service  Commission  in  May  of  1999,  allows 
the  City  to  contract  with  KPMG  for  as  needed  auditing 
and  accounting  services.  The  contract  with  KPMG  is  a 
three-year  contract  with  two  one-year  renewal  options. 
Mr.  Hymel  advises  that  the  original  KPMG  contractual 
services  for  the  Assessor-Recorder  is  limited  to  $400,000, 
which  was  included  in  the  FY  2000-2001  Assessor- 
Recorder  budget  and  did  not  include  this  subject 
supplemental  appropriation  request  of  $726,726  of  which 
KPMG  has  already  incurred  expenditures  totaling 
$380,590. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

34 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 


4.  At  its  January  17,  2001  meeting,  the  Finance  and 
Labor  Committee  requested  that  the  Assessor-Recorder 
attempt  to  reduce  the  contractual  services  costs  with 
KPMG  and  instead  complete  some  of  the  contract  work 
in-house. 

5.  In  order  to  reduce  costs,  related  to  the  third  component 
of  KPMG's  work,  namely  the  Implementation  of  the 
Reengineering  Plan,  which  KPMG  was  originally  to  have 
been  paid  $346,136,  the  Assessor  now  proposes  KPMG  to 
be  paid  $153,544  or  $192,592  less  as  follows: 

(a)  Development  of  Duties  and 
Responsibilities  Documents  and  Desk 

Procedures  $100,285 

(b)  Implementation  of  Reclassifications  for 
Appraisers  and  Clerks  39,300 

(c)  Related  expenses  13.959 

Total  $153,544 

The  details  of  this  reduced  amount  of  $153,544  is  shown 
in  the  Attachment  provided  by  the  Assessor-Recorder. 

6.  Therefore  the  proposed  supplemental  appropriation 
ordinance  for  contractual  service  costs  with  KPMG 
should  be  reduced  by  $192,592  from  $726,726  to 
$534,134. 

7.  According  to  the  Assessor-Recorder,  the  balance  of  the 
work  needed  to  complete  the  Implementation  of  the 
Reengineering  Plan  of  $192,592  would  be  handled  by  the 
Assessor's  staff  on  an  in-house  basis.  The  Budget  Analyst 
questioned  whether  the  Assessor-Recorder  Office  has 
sufficient  staffing  at  this  time  to  dedicate  employees  to 
assist  in  implementing  this  reengineering  plan  without 
forgoing  existing  needs  in  the  department.  The  Assessor- 
Recorder  responded  that  her  staff  will  just  work  harder 
to  complete  such  additional  work  as  well  as  to  fulfill  their 
existing  responsibilities. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

35 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 

Recommendations:        1.  In  accordance  with  Comment  Nos.   5  and  6  above, 

reduce  this  proposed  supplemental  appropriation 
ordinance  for  contractual  services  with  KPMG  by 
$192,592  from  $726,726  to  $534,134. 

2.  Amend  the  proposed  ordinance  to  provide  for 
retroactive  authorization  for  costs  previously  incurred, 
without  first  obtaining  prior  appropriation  approval  from 
the  Board  of  Supervisors  in  accordance  with  Comment 
No.  2  above. 

3.  Approval  of  the  proposed  ordinance,  as  amended,  is  a 
policy  matter  for  the  Board  of  Supervisors  because  the 
Assessor-Recorder's  Office  did  not  have  the  authority  to 
incur  additional  costs  of  $380,590  without  first  obtaining 
prior  appropriation  approval  from  the  Board  of 
Supervisors. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

36 


Attachment 


Contract  with  KPMG 

Hourly 

Number 

Total 

Rate 

of  Hours 

Revised  Estimates  for 

Implementation  of  Reengineering  Plan  Components 

Professional  Fees 

Managing  Director 

$281.14 

22 

$6,186 

Project  Manager 

S165.38 

344 

56,892 

Senior  Consultants 

S  148.84 

314 

46,738 

Analysts 

Subtotal  Professional  Fees 

$148.84 

200 

29,769 

880 

$139,585 

KPMG  Other  Expenses  at  10%  of  Professional  Fees 
Total-Implementation  Estimates 

13,959 

880 

S     153,544 

Source:  Assessor-Recorder's  Office 


37 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 

Item  7  -  File  01-0208 


Department: 


Item: 


Amount: 


Public  Utilities  Commission  (PUC) 

Hetch  Hetchy  Water  and  Power  (Hetch  Hetchy) 

Ordinance  appropriating  $25,400,000  of  Hetch  Hetchy 
Operating  Fund  monies  to  fund  the  purchase  of  electrical 
power  to  meet  municipal  and  contractual  obligations  for 
fiscal  year  2000-2001. 

$25,400,000 


Description: 


Recommendation: 


Due  to  problems  with  Hetch  Hetchy's  computer  system, 
the  department  was  unable  to  provide  the  Budget  Analyst 
with  requested  information.  Therefore,  Ms.  Laurie  Park, 
Acting  General  Manager  of  Hetch  Hetchy,  has  requested 
that  the  Finance  Committee  continue  the  proposed 
supplemental  appropriation  for  one  week. 

Continue  this  item  for  one  week  as  requested  by  Hetch 
Hetchy. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

38 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 

Item  8  -  File  00-2067 


Note:  This  item  was  re-referred  to  the  Audit  and  Government  Efficiency 
Committee  by  the  Board  of  Supervisors  at  its  meeting  of  January  16,  2001 
and  was  subsequently  transferred  to  the  Finance  Committee  because  of 
concerns  expressed  about  the  Public  Library  utilizing  a  collection  agency  for 
delinquent  accounts. 


Department: 
Item: 


Public  Library 

Ordinance  amending  the  San  Francisco  Administrative 
Code  by  adding  Section  8.21-2  to  authorize  the  Library 
Commission  to  revise  certain  fines  and  fees  for  the  use  of 
library  materials  and  services  and  ratifying  prior  fines 
and  fees. 


Description: 


The  proposed  ordinance  amends  Chapter  8  of  the  San 
Francisco  Administrative  Code  by  adding  Section  8.21-2, 
to: 


•  Add  a  fee  schedule  for  overdue  fines,  library  card 
replacement,  processing  fees,  replacement  of  lost 
materials,  lost/damaged  fees,  service  fees,  document 
delivery  and  special  services. 

•  Ratify  prior  fees  and  fines. 

Attachment  I,  provided  by  the  Public  Library,  provides  an 
overview  of  the  Library's  existing  and  proposed  fines  and 
fees,  as  contained  in  the  proposed  ordinance. 

Attachment  II,  provided  by  the  Public  Library,  identifies 
the  amount  of  change  for  each  fine  and  fee  and  provides 
an  explanation  of  the  differences  between  the  Public 
Library's  existing  fines  and  fees  and  the  proposed  fines 
and  fees.  According  to  Mr.  George  Nichols  of  the  Public 
Library,  the  largest  decrease  in  revenue  would  result  from 
the  elimination  of  both  the  $0.50  Interlibrary  Loan  Fee1 


1  The  $0.50  Interlibrary  Loan  Fee  is  currently  charged  to  Public  Library  patrons  when  they  request  a 
book  or  other  items  that  are  not  available  in  the  San  Francisco  Public  Library  system.  The 
Interlibrary  Loan  Fee  covers  the  cost  of  notifying  the  patron  that  the  material  requested  from 
libraries  in  other  jurisdictions  has  been  received  by  the  Public  Library  and  is  available  for  loan. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

39 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 

and  the  $0.50  Reserve  Fee2,  which  are  proposed  to  be 
deleted  in  order  to  enhance  the  public's  use  of  the 
Library's  collection.  According  to  Mr.  Nichols,  eliminating 
the  Interlibrary  Loan  Fee  and  Reserve  Fee  will  result  in  a 
revenue  loss  of  approximately  $16,000  annually. 

One  of  the  proposed  new  fees  is  a  $10  fee  for  the  Recovery 
of  Delinquent  Accounts.  The  Public  Library  has  recently 
contracted  with  the  Unique  Management  Collection 
Agency,  selected  through  a  Request  for  Proposals  process, 
to  pursue  delinquent  accounts  that  are  90  days  late,  with 
a  total  value  of  at  least  $50.00  per  account.  According  to 
Mr.  Nichols,  this  new  $10  Recovery  of  Delinquent 
Accounts  Fee  would  cover  the  cost  of  the  collection  service 
as  well  as  the  Public  Library's  cost  of  processing  returned 
materials.  Of  the  $10  Recovery  of  Delinquent  Accounts 
Fee,  $8.95  would  be  paid  to  the  collection  agency  and 
$1.05  would  be  kept  by  the  Public  Library.  Mr.  Nichols 
states  that  although  the  Public  Library's  purpose  in 
implementing  this  collection  program  is  to  recover 
overdue  books  and  materials,  additional  revenue  will 
result  from  the  Recovery  of  Delinquent  Accounts  Fee  as 
well  as  from  fines  and  fees  paid  when  overdue  materials 
are  returned.  Furthermore,  Mr.  Nichols  states  that  costs 
would  be  avoided  as  returned  materials  would  not  have  to 
be  replaced. 

Comments:  1.  As  shown  in  Attachment  III,  provided  by  the  Public 

Library,  the  estimated  annual  revenues  to  be  realized 
from  the  Public  Library's  revised  fine  and  fee  schedule 
would  be  $537,626  which  is  approximately  an  increase  of 
11.9  percent  or  $57,041  more  than  the  actual  fines  and 
fees  of  $480,585  collected  by  the  Public  Library  in  FY 
1999-2000. 

2.  Mr.  Nichols  states  that  the  amount  of  fines  and  fees  to 
be  collected  on  an  annual  basis  should  fully  recover  the 
Public  Library's  costs  including  the  costs  paid  to  the 
collection  agency  as  well  as  the  Public  Library's  costs  to 


2  The  $0.50  Reserve  Fee  is  currently  charged  to  Public  Library  patrons  when  they  request  a  book  or 
other  item  that  is  stocked  by  the  Public  Library  but  is  not  available  because  it  has  been  checked  out. 
The  Reserve  Fee  covers  the  cost  of  notifying  the  patron  that  the  material  requested  has  been 
returned,  placed  on  reserve,  and  is  available  to  be  checked  out. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 
40 


Memo  to  Finance  Committee 

February  21,  2001  Finance  Committee  Meeting 


replace  lost,  stolen,  or  damaged  materials  and  other 
related  processing  costs. 

3.  Attachment  IV,  provided  by  the  Public  Library, 
provides  information  as  to  how  the  proposed  fines  and 
fees  were  determined.  According  to  Mr.  Nichols,  the 
proposed  fines  and  fees  schedule  was  approved  on 
September  5,  2000  by  the  Library  Commission.  Mr. 
Nichols  reports  that  the  Public  Library's  fines  and  fees 
were  last  revised  in  1994. 


Recommendation: 


4.  According  to  Ms.  Susan  Hildreth  of  the  Public  Library, 
the  only  fine  or  fee  not  currently  in  effect  is  the  $10 
Recovery  of  Delinquent  Accounts  Fee. 

5.  According  to  Mr.  Buck  Delventhal  of  the  City 
Attorney's  Office,  prior  to  the  City's  1996  Charter,  the 
Library  Commission  had  the  authority  to  set  the  Public 
Library's  fines  and  fees.  In  accordance  with  the  1996 
Charter  Section  2.109,  the  Board  of  Supervisors  must 
approve  by  ordinance  any  rate,  fee,  or  similar  charge  to  be 
imposed  by  any  City  department.  Currently  there  is  no 
section  in  the  City's  Administrative  Code  for  Library  fines 
and  fees.  Mr.  Delventhal  states  that  the  proposed 
ordinance  would  establish  the  fines  and  fees  of  the  Public 
Library  as  well  as  ratify  (a)  the  existing  fines  and  fees  and 
(b)  the  proposed  revised  fines  and  fees. 

Approval  of  the  proposed  ordinance  is  a  policy  matter  for 
the  Board  of  Supervisors. 


Supervisor  Leno 
Supervisor  Peskin 
Supervisor  Gonzalez 
Clerk  of  the  Board 
Controller 
Steve  Kawa 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

41 


ll'ffJOO 


LIBRARY  FINES  FEES 


Attachment  I 
Pase  1  of  T~ 


?.--• CURKfcNI. 

"PROPOSED                          I 

ADULT                 TEENS 

JUVENILES 

ADULT                 TEENS 

JUVENILES 

FINES 

Per  Day  1    Max    |  Per  Day  |     Max 

Per  Day  |    Max    |    |  Per  Day  |    Max    |  Per  Day  j     Max 

Per  Day  I     Max 

Books 

$    0.10  I  $    5.00  I  J     -     I  $     - 

$     -     I  $     -     |     |  $    0.10  I  $    5.00  |  $      -     I  $      - 

I     .     If     . 

Phonorecords 

$    0.10  1$    5.00  1$     -     1$     - 

S      -     IS     -     I     |S    0.10  I  $    5.00  |  $     -     IS     - 

$     -     l$     - 

Audio  Cassettes 

$    0.10  i  $    5.00!$     -     !$     - 

$     -     IS     -     i    IS    0-10 

$5,001$     -     IS      - 

$     •     IS     - 

Books  on  Tape 

$    0.10  .  $    5.00  i  $     -     I  $     - 

S     -     IS     •     i    IS    0.10 

$    5.00 1  $      -     |  $     . 

S    -    IS    ■ 

Compact  Discs 

I            I            i 
$  0.50  i  $  10.00 :  $    -    !  $    - 

s    -    Is    -    I   Is  0.10 Is  5.00 Is    •    Is    • 

s    - 

Magazines 

$    0.10 1    Cost      »     -     i  $     - 

S     -     IS     -     I    IS    0.10IS    5.00  1$     •     |$     . 

$    - 

Paperback  (Cataloqued) 

$    0.10  I  $    5.00  i  $     -       $     - 

S     -     IS     -         IS    0.10  1$    5.00  1$     -     |$     - 

$    • 

Paperback  (Uncataloqued) 

I       I       i 

$    0.10  I  $    0.50  I  $     -     !  S     • 

$    - 

I 
$          i 

S   0.10  !$    2.00 

, .  ,. 

$   - 

Art  Prints 

$    1.00  I  $  10.00  !  $     -       $     - 

$    - 

$     - 

s    • 

s  -  Is   • 

$    - 

Video  &  DVD 

$    1.00 

i             I 
$  10.00  I  $    1.00  i  $  10.00 

$    1.00 

$  10.00  i 

$    1.00 

S    5.00 

s    - 

s    - 

Supplemental  Materials/Booklets 

$    0.25!$    3.00' 

$   - 

$    - 

IS    - 

$ 

s    - 

s    - 

Sheet  Music 

Varies 

Varies    |$     •     !$     • 

s    - 

J 

$    0.10 

$    5.00 

s    - 

s    - 

Orchestral  Material/Music  Sets 

$    0.25  I  $  10.00  !  $     -     IS     - 

s    • 

r$  • 

s   ::-. 

$  10.00 

s    - 

$     -     !$     • 

Vertical  File  Materials 

$    0.10  I  $    5.00  i  $     -     I  $     - 

$     •     l$     -     |    |$    0.10;$    5.001$     ■ 

$     ■     IS     •     i 

FEES 

Per  Day 

Max 

Per  Day 

Max 

Per  Day 

Max 

Per  Day 

Max 

Ptr  Day 

Max 

Per  Day 

Max 

Library  Card  Replacement 

S    2.00 

$    0.50 

• 

$    0.50 

.- 

$    1.00 

_  >  - 

$    0.50 

--■■:- 

$    0.50 

Visitors  Card  (Non-California  Resident) 

$20.00 

$  20.00 

$  20.00 

$  1000 

'■  ■'. .-. 

,    .  „ 

$  10.00 

Processing  fee  (lost  catalogued  material) 

.    '... 

$    5.00 

t 

$    5.00  I  - 

$    5.00  1 

.--- 

$   5.00                s    ■: 

$    5.00 

Processing  fee  (lost  uncatalogued  material) 

$    100 

■    - 

$    200  I   -  - 

$    2.00  1 

-     .■-■■■ 

$     - 

t     t  rvt 

$      • 

Books  by  Mail 

?&\ 

$     - 

"  » 

S     - 

$     •     1 

$    3.00 

$    3.00 

Interlibrary  Loan  (ILL) 

$    0.50 

$    0.50 

■   -    • 

$    0.50  1 

$      • 

$       • 

$     • 

Reserve  Fee 

'  -.' ■•'■ 

$    0.50 

$    0.50 

1    r  .    . 

$    0.50 

■"-.-. 

$     - 

$       ■ 

-;_."■ 

s    • 

Returned  Check  Fee 

perChk. 

$  10.00 

S  10.00  | 

N/A     1     I  perChk. 

$  10.00 

■     ' 

$  10.00 

i-jTVC 

N/A 

Recovery  of  Delinquent  Accounts 

. 

$     - 

\ 

i    i  perAcct 

$  10.00 

: 

1 
1 

Interlibrary  Loan  (ILL)  Photocopy  Fee 

per  page 

$    0.15 

per  page:  $    0.15 

per  page 

$    0.15  :    |  per  page!  $    0.25 

pa  pane 

$    0.25 

per  page 

$    0.25  ; 

SF  History  Center  Photocopy  Fee 

per  photc 

$    1.00 

per  photo  $    1.00  i  per  photc 

$    1.00i     !  per  photo  $    1.00 

per  photc 

$    VOOlparpnotdS    1.00 1 

SF  History  Center  Reproduction  Fee 

$  15.00  |  2 

$  15.00  | 

$  15.00  |H 

$  15.00  | 

s  -;:: 

Barcode  Label 

J  - 

$    0.25 

-  i$    0.25  I  " 

$    0.25  I 

$    0.25 

■ 

$   02SH9 

$    0.25! 

Damaged  Barcode  &  Flyleaf 

$ 

IS     -     I 

$    -    | 

.    : 

$    1.00 

$    1.00 

::±3.~- 

$    1.00  I 

Crayoning  a  single  page 

$    0.25 

$    0.25  I  r 

$    0.25! 

- 

$     • 

$    • 

$      - 

Damaged  Date  Due  Slip 

$    0.10 

$    0.10 

' 

$    0.10  I 

$      - 

$    - 

$      - 

Damaged  Mylar  Book  Cover 

IS    0.25 

$    0.25 

$    02! 

. 

$     - 

$    -    I 

$      • 

Damaged  Plastic  PD  Sleeve 

|$    1.00 

!; 

$    1.00 

!   / 

s  1.00 

1 

$      - 

I.  • 

I 
$      - 

Source:  SF  Public  Library 


42 


LIBRARY  FINES  FEES 


Attachment  I 
Page  2  of  T~ 


ADULT                TEENS            JUVENILES 

ADULT 

TB 

ENS 

JUVEI* 

1ILES 

REPLACEMENT  COSTS 

Perltem|     Max    | Per ltem|     Max    (Per ltem|     Max    | 

Per  Item]     Max    |  Per  Item]     Max    (Per  Itemj     Max    | 

Hardback  Non-fiction 

$  25.00  ;  S  30.00  1  S  25.00  i  $  30.00  1  $  12.00  I  $  17.00  I 

I  $  35.00  I  $  40.00  |  $  35.00  I  $  40.00  |  $  20.00 

S  25.00  | 

Hardback  Fiction 

$  18.00  !  S  23.00  I  S  18.00  I  $  23.00  I  S  12.00  !  S  18.00  i 

I  $  25.00  I  $  30.00  I  $  25.00  |  $  30.00  |  $  15.00 

$  20.00 

Paperback  Catalogued  Non-fiction 

S     -     I  S  15.00  I  $     -     IS  15.00  IS     -     I  $  10.00  I 

I  $  20.00  I  $  25.00  |  $  20.00  I  $  25.00  |  $  10.00  |  $  15.00 

Paperback  Catalogued  Fiction 

$     -     i  $    5.00  ;  $     -     IS    5.00  IS     -     IS    5.00  ! 

i  $  10.00  |  $  15.00 

S  10.00  !  $  15.00  I  $    5.00  |  $  10.00 

Paperback  Uncatalogued 

$    5.00  :  S     -     I  $    5.00    $     -     I  S    5.00 1  $     -     ! 

I  $    5.00  I  $     - 

$    5.00  |  $     -     |  $    5.00  I  $     - 

PB/HB  International  Generic  Record 

$    5.00  I  $  10.00  I  S    5.00  I  S  10.00  IS    5.00  I  S  10.00  i 

I  $    5.00  |  S  15.00  I  $    5.00  |  $  15.00  I  $    5.00  I  $  15.00 

Periodicals/Magazines 

S    3.00  i  S     -     i$    3.00  !  $     -     IS    3.00  i  $     - 

!  S    5.00  !  $     -     IS    5.00  i$     -     |  $    5.00  I  $     - 

Phonorecords 

S    9.00  i  $     -     IS    9.00  i  $     -     IS    9.00  1 S     • 

i  $  15.00  |  S  20.00  I  S  15.00  j  $  20.00  |  $  15.00  |  $  20.00 

Audio  Cassettes 

$11,00  1$     -     !$  11.00  1$     -     1$  11.00  1$     - 

I  $  10.00  i  $     -     |  $  10.00  |$-     |$  10.00  |  $     - 

Videos 

VARIES  1  VARIES  1  VARIES  '  VARIES  1  VARIES  1  VARIES 

I  $  20.00  I  $  25.00  |  $  20.00  |  $  25.00  j  S  20.00  |  S  25.00 

Digital  Video  Disc  (DVD) 

S     -     I  $     -     i  $     -     i  $     -     i  $     -     1  $     - 

|  $  20.00  |  $  25.00 

$  20.00  I  $  25.00  I  $  20.00 

$  25.00  j 

Audio  Books 

$    5.00  1  per  tape  i  $    5.00  1  per  tape  1  $    5.00  |  per  tape 

|  $    5.00  I  pertape 

S    5.00  I  per  tape  |  $    5.00 

pertape 

Sheet  Music  Scores 

1  SET  BY  ART  DEPARTMENT  1 

|  SET  BY  ART  DEPARTMENT  | 

Sheet  Music  (Uncatalogued) 

i  SET  BY  ART  DEPARTMENT  1 

|  SET  BY  ART  DEPARTMENT  I 

Sup.  Materials  (I.e.,  booklets,  maps,  etc.) 

$    3.00  M        .    |$    3.00  |  -i--:---|$    3.00|--~-: 

!  $    3.00  bW-sj 

S    3.00  PaijpS; 

$    3.00  |iS^>:r: 

Compact  Discs 

VARIES  1               i  VARIES  1               1  VARIES  1 

|  $  15.00  |  $  20.00 

$  15.00  |  S  20.00 

$  15.00  |  $  20.00 

Language  Sets 

$  10.00  I"  -'"-   |  $  10.00  I   ' 

$  10.00  l-^i-- 

j  S  10.00  \y^T&-: 

$  10.00 

■i  "SS?S 

$  10.00  1 1  -.  --- 

Vertical  File/Picture  File 

$    2.00  I--.           |S    2.00  |  , 

$    2.00  K 

|$   5.00  !=•  s-^i 

$    5.00 

■-  --'-.= 

$    5.00  ;     \  ' 

Lost  Audio  Cassette  Case 

$    1.00  I  ,. 

L$    1.00 

$    1.00  |  -:     - 

IS   1.00  r^sa^ 

$    1.00 

ri£§=*3 

$    1.00 

SSJeS  ~ 

Lost  Videocassette  Case 

S    3.00  I  -  - 

$    3.00 

$    3.00  I  '-- 

i  $  2.00  ys^gjg 

$    2.00 

~i  -    ~ 

$    2.00 

■i7:^- 

Lost  CD  Jewel  Case 

$     -     I  ■■-■■  -IS     -    I       ",-: 

$  -  m  - 

i$  loo  r. .--^.-.■<-- 

$    1.00 

:lv^_v 

S    1.00  t-  v^- 

Source:  SF  Public  Library 


43 


\3Hfion 

LIBRARY  FINES  FEES 

Attachment    11 
Paere    1    ot    2 

':.^y-:-,;.                                          ;;.,,,          *.>,-.-•.  ^■^"'■'■H 

FINES                                                      ;    I  Per  Day)     Max    |  Per  Day]     Max    |  Per  Day|     Max    | 

1  Books                                                        1$     -  .  i$     ■      S     -     ! 

S      •      IS      -      1 

s     -     1 

Phonorecords                                              IS     -     '  S     •     '  S     -     ' 

1    •    IS     -    1 

s    • 

Audio  Cassettes                                       1    |  S     -     !  S     -      $     -     1 

S     •     IS     -     1 

s    -    ! 

Books  on  Tape                                            1  $     -     !  S     •      i     -     1 

s    ■    is    -   1 

Compact  Discs                                            1  $  (0.40)  i  S  (5.00)'  $     -     1 

,    -    Is    -   1 

Daly  and  maaimum  bias  reduced  so  tnat  tney  wl  be  consistent  witn  other  daly 
(       *       land  maunum  ftr.es. 

Maqazines                                                  1$     -     I  VARIES   S     -     1 

S    -    IS    -    i 

J      -       Maximum  Una  changed  so  mat  It  wipe  comment  with  other  maiimura  tnte. 

Paperback  (Catalogued)                                               t     - 

S     -     l$     -     i 

Paperback  (Uncataloqued) 

[S    -     >S    150 :  $     -     ! 

, .  1. . 

Maun  urn  fine  Increased  at  an  incentive  for  paffor.s  Is  return  material  a  a  emery 
S       •        manner.  Currant  mailmum  ot  $0.50  is  not  sufficient. 

i  Art  Prints 

S          IS 

S       -        Oont  hava  an  prints  m  circuiaQon  anymore. 

Video  &  DVD 

I          I 

I        '        I 

S     -     i  S  (5.00):  S  (1.00)1 

S(10.00) 

$  (1.00) 

AduP.  maunum  ana  reduced  to  mate  £  consistent  trith  other  maonun  lata.  Fact 
jtbninatad  lor  chsiren  and  latns  consistent  with  poky  nol  to  Oiarga  lata  Ittt  to 
S  (10  00)  thia  group  ol  users. 

Supplemental  Materials/Booklets 

S     -     I 

S       -       Hams  artnl  catalogued  and  ara  not  ncted    Fines  nol  generaty  asstssad. 

Sheet  Music 

1  VARIES  ;  VARIES  :  S      - 

s    - 

Daly  and  maximum  Unas  changed  so  that  they  would  ta  continent  «w  other  dae> 
$               and  maximum  (lots. 

Orchestral  Material/Music  Sets                        IS     -     IS     •      S     -     ! 

s    - 

s    -    1 

Vertical  File  Materials                                |    1 S     -     IS     -      S     -     i 

S          IS 

s    -    1 

FEES 

Per  Day 

Max    I  Per  Day 

Max 

Per  Day 

EXPLANATION  OF  CHANGE 

Library  Card  Replacement 

S  (1.00) 

s    • 

purcnaseig  a  debit  card  'or  St  00  and  registering  it  as  a  etwarv  card    Re;  srate-  is 
iret   Thi  Ubrary  w*  contnua  Is  cnarga  SI  00  to  pawnt  who  ds  aot  want  10  ouya 
S               deb*  card 

Visitors  Card  (Non-California  Resident) 

S  (10.00) 

S  (10.00) 

te  nctudct  SI0  refundable  depott  ater 3  months.  Depose,  was  mposad 
to  ensure  return  of  materials   Currently,  mcst  non-Stiia  cards  are  issued  lor 
$(10.00)  witemel  access  and  notlsroooU.  Ccnxeouency.  ana  deposit  *  not  rtourad. 

Processing  fee  (lost  catalogued  material) 

S     ■     I 

s    - 

S     -     i 

Processing  fee  (lost  uncatalogued  material)    1 

•- 

S  [2jOO)I 

S  (100) 

S   (2.00)  coded 

Books  by  Mail 

I 
S    3.00  I 

S    3.00 

New  lee    Covers  cost  of  snipping  and  ranging  ol  pools  ffiat  ara  mated  to  pama* 
S     3.00   Actual  amount  charge  wii  be  S3  o-  the  actual  cost  of  snipping  and  nandaeo. 

Interlibrary  Loan  (ILL) 

; 

i  ..  . 

S  (0.50)! 

S  (0.50) 

' 

Fee  eammaied  to  enhance  the  use  olthe  coaactssn  and  to  enprsve  put*  serve*. 
S    (0.50)  fees  deter  patrons  from  access  to  eoleewn.  Vary  mmenat  impact  on  revenue 

Reserve  Fee 

S  (0.50) 

S  (0.50) 

Fees  deutr  patrons  txm  access  to  co section.  Very  mourn  aJ  en  pact  on  re  ve  nut 
Met:  reserves  are  made  ma  eraea/computer  eamoabng  Ova  coat  of  post  card  and 
S    (0.50)  postage. 

Returned  Check  Fee 

s    - 

' 

N/A      I 

|  Recovery  of  Delinquent  Accounts                     !  per  AcdJ  S  10.00  j 

s    • 

New  lee.  Ltorary  has  contracted  e«  a  coitction  servxe  to  pursua  matanata  Ml 
$               are  90  dayi  late  and  valued  over  SSfl. 

i  Interlibrary  Loan  (ILL)  Photocopy  Fee               |  per  page!  $    0.10  i  per  page 

S    0.10  I  per  page 

S     0.1C    increased  Is  reflect  cost  ol  espying. 

I  SF  History  Center  Photocopy  Fee                    |  per  photc  S     -     ;  per  photc 

S          |  perphob 

s    - 

I  SF  History  Center  Reproduction  Fee                            I  S     -     I 

S     •     I 

s    - 

Barcode  Label 

IS     •     i 

s    - 

- 

s    - 

Damaged  Barcode  &  Flyleaf 

■IS    1.00  I 

S    1.00 

S     1.00   labor  eitenslve  process  a*  bar  code  is  damaged 

Crayoning  a  single  page 

I  S  (0.25) i 

S  (025) 

Fm  e --mated  as  4  a  dtfGcus  or  enposaitua  to  detarmeie  whether  damage  was  a 
S    (0.25)  pre-exrstrg  condition.  Admirusffatrveiy  u na a lorca able. 

Damaged  Date  Due  Slip 

S  (0.10)1    • 

S  (0.10) 

Fee  eemwated  as  «  bj  diflciil  or  enpsuaie  to  determine  whether  damage  was  a 

$    (0.10)  pre-aiutng  condition.  Adraimstratrvaiy  «nenlorceab« 

Damaged  Mylar  Book  Cover 

"  "  -     IS  (0.25)! 

S  (0.25) 

Fee  etrruhated  as  it  a  til<ut  or  enpotsibw.  to  dettrmm*  w  he  mar  damage  was  a 
$    (0.25)  pre-eiotng  condition.  Ad  ewHHalioS)  earnifcrceabie 

Damaged  Plastic  PD  Sleeve 

|  S  (1.00); 

S  (100 

-    ■ 

Fee  eimmaled  as  » is  dimcue.  or  enpotSJOie  to  dete— i-e  vrtether  damage  mi 
S   (1 .00)  prt-exisung  condWoa.  Admnitntvety  unentorceab* 

-ME00008.xls 

44 

Source:    SF   Public   Library 

ftLi.aciU'JKLlL      . 

Pa<*e  T  of  2 


JK-.O00 

LIBRARY  FINES  FEES 

g^^^-^a^aiia^i^illggg^^gaBg-agsasBsa  | 

EXPLANATION  OF  CHANGE 

REPLACEMENT  COSTS 

Perltem|     Max    |  Per  Item]     Max    |  Per  ltem|     Max    | 

EXPLANATION  OF  CHANGE 

Hardback  Non-fiction 

$  10.00  ;  $  10.00  i  $  10.00  |  $  10.00  IS    8.00  I  $    8.00  I 

Hardback  Fiction 

$    7.00  i  $    7.00  !  $    7.00  I  $    7.00  IS    3.00  I  S    100  1 

Paperback  Catalogued  Non-fiction 

$  20.00  i  S  10.00  I  $  20.00  i  $  10.00  I  $  10.00  I  $    5.00  ! 

Paperback  Catalogued  Fiction 

$  10.00  I  S  10.00  i  $  10.00  I  $  10.00  I  S    5.00  I  $    5.00  j 

Paperback  Uncatalogued 

$    -    is    -    Is    -    IS    -    IS    -    IS     -    I 

PB/HB  International  Generic  Record 

S      -      !$    5.00  '  S      -      IS    5.00  |  $      -     |$    5.00  :  Revised  amounts  reflect  current  replacement  costs  for  various  materials. 

Periodicals/Magazines 

$    2.00  i  $      -      i$    ZOO'S      -      IS    2.00  I  $      -      iThese  amounts  are  used  only  when  materials  cannot  be  located  or  found 

Phonorecords 

S    6.00  i  $  20.00    S    6.00  !  $  20.00  j  S    6.00  i  $  20.00  llhrough  a  bibDographic  services  such  as  Amazon.Com  or  Bowkers  Annual. 

Audio  Cassettes 

$   (1.00)1  S      -      1$   (1.00)1$      -      |$   (1.0O)|  S      -      1  Estimated  that  less  than  5%  of  materials  cannot  be  located  through  these 

Videos 

VARIES  !  VARIES  1  VARIES  !  VARIES  1  VARIES  j  VARIES  sources.  The  Library  will  assess  fair  market  value  for  lost  items  based  on 

Diqital  Video  Disc  (DVD) 

$  20.00  I  S  25.00  i  S  20.00  I  S  25.00  !  S  20.00  |  $  25.00  quotes  from  bibliographic  sources.  Replacement  charges  are  in  addition  to 

Audio  Books 

$      -      |     N/A     I  S      -      1     N/A     i  S      -     1     N/A     1  processing  fees. 

!  Sheet  Music  Scores 

j  NO  CHANGE         1 

Sheet  Music  (Uncatalogued) 

i              I  NO  CHANGE 

Sup.  Materials  (I.e.,  booklets,  maps,  etc.) 

s    .    ]■■-        |s    -    lv.-  -..—-Is    - 

■---.-  .    :  "  | 

Compact  Discs 

VARIES  1  $  20.00  1  VARIES  1  $  20.00  1  VARIES 

$  20.00  iNewfee.  DVDs  a  growing  part  of  the  Library's  circulation. 

Lanquage  Sets 

$     -     |v  ■■■:■: 

s   - 

$    - 

Vertical  File/Picture  File 

S    3.00|  - 

$    3.00 

$    3.00 

■  :" 

I  Lost  Audio  Cassette  Case 

$     -     1    - 

S               -                -: 

$      - 

i  Lost  Videocassette  Case 

1$  [1.00)1 

$  (1.00)1   . 

$  (1.00) 

-■:■   - 

!  Lost  CD  Jewel  Case 

|$    1.00  1 

$    1.00  | 

S    1.00 

~-'.'~  ■ 

Source:  SF  Public  Library 


45 


'2/15/01 


DEPARTMENTAL  REVENUE 
Public  Library 


Attachment   III 


ACTUAL  PROJECTED 

FY  1 999-2000         ANNUAL  REVENUE 


Books  Paid 
Fines  &  Fees 
Reserves 
ILL  Fee 


43,261 

$ 

41,548 

418,819 

$ 

479,512 

14,814 

$ 

14,901 

3,691 

$ 

1.665 

480,585    $ 


537,626 


FY  1999-00  per  FAMIS. 

No  decreases  in  departmental  revenues  are  expected  as  a  result  of  the  proposed 

fine  and  fee  schedule. 


he 


Attachment    IV 
jus  Page    1    of    ?. 

■'i     .  SUPPLEMENTAL  MATERIAL 

FINES  &  FEES  ORDINANCE  AND  FORTUNIO  RESOLUTION 

December  19,  2000 


FINES  &  FEES 

How  were  fines  &  fees  determined?  What  process  did  the  library  qo  through  to 
determine  the  new  fee  schedule? 

The  revision  of  the  fines  and  fees  schedule  has  been  under  consideration  by  the  Library 
for  more  than  seven  years  (since  1994).     The  key  factors  considered  in  this  review 
were  customer-friendly  policies  and  policies  that  best  protected  the  Library's  collection. 
Fines  and  fees  schedules  for  other  public  libraries  in  the  Bay  Area  were  surveyed  to 
determine  regional  benchmarks  and  best  practices  in  this  area.  The  impact  of  newer 
formats,  services  and  technologies  also  was  a  determining  factor  in  revising  the  fines 
and  fees  schedule.  For  example,  the  implementation  of  a  vendor-supplied  debit  card  - 
which  provides  library  cards  with  $1 .00  photocopy  value  for  the  price  of  $1 .00  -  was 
inconsistent  with  the  standard  library  charge  of  $2  for  a  replacement  library  card.  Other 
new  services  include  the  implementation  of  a  collection  recovery  program  aimed  at 
protecting  the  collection  (see  below  for  details)  and  a  books-by-mail  service  for 
customer  convenience. 

The  fines  &  fees  schedule  was  determined  after  many  meetings  of  the  public  services 
staff  and  review  and  approval  by  the  Library  Commission  at  several  public  meetings. 
The  proposed  schedule  reflects  modern  techniques  of  pricing  materials  and  includes 
new  media  formats  (DVD).  One  of  the  most  important  changes  for  customer  service  is 
the  elimination  of  the  $.50  charge  for  reserves  for  materials  owned  by  the  Library  and 
materials  borrowed  from  other  libraries.  Elimination  of  this  charge  makes  the  entire 
collection  available  for  anyone's  use,  no  matter  which  branch  they  choose  to  visit.  The 
proposed  fines  and  fees  schedule  was  devised  to  serve  as  an  incentive  plan  to  return 
materials  in  a  timely  manner. 

What  is  the  relationship  between  the  fines  assessed  and  the  cost  to  the  library? 

Fines  for  overdue  materials  act  as  an  abatement  to  the  cost  of  sending  out  notices  that 
remind  people  to  return  their  materials.  The  cost  of  replacement  of  lost  materials  has 
been  modified  to  reflect  that  the  most  up-to-date  information  sources  will  be  checked  to 
determine  that  cost.  If  that  information  is  not  available,  then  a  default  "standard  price"  of 
materials  will  be  used,  which  is  based  on  current  average  pricing  for  materials.  The 
application  of  a  consistent  "processing  fee"  attempts  to  recover  a  portion  of  the  library's 
investment  in  the  average  cost  of  cataloging  and  processing  materials.  If  there  is  no 
processing  or  cataloging  (i.e.  paperback  books),  we  are  recommending  that  the 
processing  fee  not  be  applied. 

The  Library's  Mission  Statement  states  "The  Library  is  dedicated  to  free  and  equal 
access  to  information...."    To  effect  this  mission,  the  public  and  the  staff  believe  that  it  is 
in  the  best  interest  of  the  library  to  make  all  of  its  materials  accessible  via  reserves  to  all 
patrons  for  free.    Similarly,  since  we  are  not  charged  for  the  interlibrary  loan  of  books 
from  other  libraries,  the  staff  and  public  believes  the  Library  should  not  charge 
customers  for  access  to  the  materials  of  other  libraries. 


Source:  SF  Public  Librarv 


Attachment    IV 
Pape    'I    of    2 
SUPPLEMENTAL  MATERIAL 
FINES  &  FEES  ORDINANCE  AND  FORTUNIO  RESOLUTION 

December  19,  2000 


How  will  the  collection  program  work?  Who  gets  referred  and  what  criteria  will  be 
used? 

Customers  who  have  not  returned  materials  worth  more  than  $50.00  that  are  more  than 
45  days  overdue  will  be  electronically  sent  to  the  Collection  Agency  by  the  Library's 
automated  system.  Currently,  library  customers  receive  only  one  notice  when  material  is 
overdue.  With  the  Collections  process,  the  Library  will  implement  a  second  overdue 
notice  to  alert  customers  that  not  returning  materials  may  result  in  the  referral  of  their 
account  to  a  collection  agency.  We  have  a  written  agreement  with  the  Tax  Collector  to 
assume  this  collection  duty  through  a  third  party  library  vendor.  We  believe  that  lowered 
fines  and  fees  combined  with  a  collection  agency  program  will  stimulate  both  the  use 
and  the  return  of  library  items. 


Source:  SF  Public  Library 


5.25 


*/>/ 


[All  Committees] 

City  and  County  of  San  Francisco       S°Ye™I!lent  Document  Section 

J  J         ~  Main  Library 

Meeting  Minutes 
Finance  Committee 

Members:  Supervisors  Mark  Leno,  Aaron  Peskin  and  Matt  Gonzalez 

Clerk:  Gail  Johnson 

Wednesday,  February  28,  2001  10:00  AM  City  Hall,  Room  263 

Regular  Meeting 

Members  Present:      Mark  Leno,  Aaron  Peskin,  Matt  Gonzalez. 


DOCUMENTS  DEPT 

MEETING  CONVENED 

MAR 

The  meeting  convened  at  10:08  a.m.  SAN  FRANCISCO 

PUBLIC  LIBRARY 

002067        [Library  Fines  and  Fees] 
Supervisor  Newsom 

Ordinance  amending  the  San  Francisco  Administrative  Code  by  adding  Section  8.21-2  to  authorize  the  Library 

Commission  to  charge  certain  fines  and  fees  for  the  use  of  library  materials  and  services  and  ratifying  prior 

fines  and  fees. 

1 1/20/00,  ASSIGNED  UNDER  30  DAY  RULE  to  Audit  and  Government  Efficiency  Committee,  expires  on  12/20/2000.  Sponsor: 

Supervisor  Kaufman 

1/2/01,  RECOMMENDED  AS  COMMITTEE  REPORT.  Heard  in  Committee.  Speakers:  Susan  Hildreth,  City  Librarian;  Supervisor 

Katz;  Peter  Warfield. 

To  Board  as  Committee  Report  January  2,  2001. 

1/2/01 ,  PASSED,  ON  FIRST  READING.  Supervisor  Newsom  requested  to  be  added  as  co-sponsor. 

1/16/01,  SEVERED  FROM  CONSENT  AGENDA.  Supervisor  Yee  requested  this  matter  be  severed  so  it  could  be  considered  separately. 

1/16/01,  RE-REFERRED  to  Audit  and  Government  Efficiency  Committee. 

2/1/01,  TRANSFERRED  to  Finance  Committee.  New  committee  structure. 

2/21/01,  CONTINUED.  Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Susan  Hildreth,  Acting  City  Librarian;  Dorothy 

Copely,  Public  Library;  Edward  Harrington,  Controller;  George  Nichols,  Finance  Director,  Public  Library;  James  Chafee;  Theodore 

Lakey,  Deputy  City  Attorney;  Peter  Warfield;  Nicole  Termini;  Deetje  Boler;  Michael  FaiTah,  Legislative  Assistant  to  Supervisor 

Newsom. 

Continued  to  2/28/01. 

Heard  in  Committee.  Speakers:  Susan  Hildreth,  Acting  City  Librarian;  James  Chafee;  Timothy  West,  Field 
Representative,  Local  790;  Peter  Warfield;  Deetje  Boler;  George  Nichols,  Finance  Director,  Public  Library. 
Amended  on  page  5  by  adding  Section  2,  listing  the  conditions  under  which  the  Board  of  Supervisors  is 
approving  the  agreement  between  the  Public  Library  and  Unique  Management  Collection  Agency  for  the 
recovery  of  delinquent  accounts. 
AMENDED. 

RECOMMENDED  AS  AMENDED  by  the  following  vote: 
Ayes:  2  -  Leno,  Peskin 
Noes:  1  -  Gonzalez 


City  and  County  of San  Francisco  I  Printed  at  7:38  PM  on  3/1/01 


Finance  Committee 


Meeting  Minutes 


February  28,  2001 


010105        [Geographic  Information  System  Data  License  Fees] 

Ordinance  amending  the  San  Francisco  Administrative  Code  by  adding  Section  8.40  to  authorize  the 
Department  of  Public  Works  to  charge  license  fees  for  the  use  of  the  City's  Base  Map  Geographic  Information 
System  ("GIS")  data  and  ratifying  prior  fees.  (Public  Works  Department) 
1/17/0!,  RECEIVED  AND  ASSIGNED  to  Transportation  and  Land  Use  Committee. 
2/1/01,  TRANSFERRED  to  Finance  Committee.  New  committee  structure. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Douglas  Legg,  Finance  and  Budget  Division, 
Department  of  Public  Works;  Jeffrey  Johnson,  Office  of  Geographic  Data  Services,  Department  of  Public 
Works;  Denise  Brady,  Deputy  Director,  Department  of  Telecommunications  and  Information  Services;  Erin 
McGrath,  Mayor's  Budget  Office,  Theodore  Lakey,  Deputy  City  Attorney. 
CONTINUED  TO  CALL  OF  THE  CHAIR  by  the  following  vote: 
Ayes:  3  -  Leno,  Peskin,  Gonzalez 


010252        [Reserved  Funds,  PUC-Water  Department! 

Hearing  to  consider  release  of  reserved  funds,  Water  Department  (fiscal  year  2000-2001  budget),  in  the  amount 
of  $51 1,891,  to  fund  overtime  expenditures,  especially  in  responding  to  emergencies  such  as  mam  breaks  and 
service  line  leaks.  (Water  Department) 
2/7/01,  RECEIVED  AND  ASSIGNED  to  Finance  Committee. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Kingsley  Okereke,  Director  of  Finance,  Public 
Utilities  Commission;  John  Mullane,  General  Manager,  Public  Utilities  Commission. 
Release  of  reserved  funds  in  the  amount  of $51 1,891  approved. 
APPROVED  AND  FILED  by  the  following  vote: 
Ayes:  3  -  Leno,  Peskin,  Gonzalez 


010208        [Government  funding,  Hetch  Hetchy's  power  purchases) 

Ordinance  appropriating  $25,400,000  of  Hetch  Hetchy  Operating  Fund  to  fund  the  purchase  of  power  to  meet 
municipal  and  contractual  obligations  for  fiscal  year  2000-01.  (Controller) 

(Fiscal  impact.) 

1/31/01 ,  RECEIVED  AND  ASSIGNED  to  Finance  Committee. 
2/21/01,  CONTINUED.  Heard  in  Committee.  Speakers:  None. 
Continued  to  2/28/01. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Laurie  Park,  Acting  General  Manager,  Hetch 

Hetchy  Water  and  Power;  Ken  Bruce,  Budget  Analyst's  Office;  Theodore  Lakey,  Deputy  City  Attorney; 

Theresa  Mueller,  Deputy  City  Attorney;  John  Bardis. 

Amendment  of  the  Whole  prepared  in  Committee,  v,hich  amended  funding  sources  and  placed  SI,  781,912  on 

reserve. 

(Hetch  Hetchy  was  requested  to  provide  a  report  to  the  Finance  Committee  on  the  status  of  Hetch  Hetchy's 

projected  deficit  for  the  purchase  of  electrical  power  for  resale  by  May  1,  2001.) 

AMENDED,  AN  AMENDMENT  OF  THE  WHOLE  BEARING  NEW  TITLE. 

Ordinance  appropriating  $25,400,000  of  Hetch  Hetchy  Operating  Fund  to  fund  the  purchase  of  power  to  meet 

municipal  and  contractual  obligations  for  fiscal  year  2000-01;  placing  $1,781,912  on  reserve.  (Controller) 

(Fiscal  impact.) 

RECOMMENDED  AS  AMENDED  by  the  following  vote: 
Ayes:  3  -  Leno,  Peskin,  Gonzalez 


City  and  County  of  San  Francisco 


Printed  at  7:38  PM  on  3/1/01 


Finance  Committee 


Meeting  Minutes 


February  28,  2001 


010145        [Sublease  of  Treasure  Island  Brig  Facility  for  Sheriffs  Department] 

Resolution  approving  a  sublease,  retroactive  to  July  1,  2000,  between  the  City  and  County  of  San  Francisco 
(The  "City")  and  the  Treasure  Island  Development  Authority  (The  "Authority")  for  certain  property  on 
Treasure  Island  commonly  known  as  the  Brig  (Buildings  670  and  671)  located  at  the  corner  of  13th  and  M 
Streets  on  Treasure  Island,  for  an  annual  rent  not  to  exceed  5250,000  per  year.  (Real  Estate  Department) 

(Fiscal  impact.) 

1/24/01,  RECErVED  AND  ASSIGNED  to  Finance  Committee. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Michael  Hennessey,  Sheriff;  Jean  Mariani, 
Chief  Financial  Officer,  Sheriffs  Department;  Annemarie  Conroy,  Executive  Director,  Treasure  Island 
Development  Authority;  Anthony  Delucchi,  Director  of  Property,  Real  Estate  Division,  Administrative  Services 
Department. 
Continued  to  3/14/01. 
CONTINUED  by  the  following  vote: 
Ayes:  3  -  Leno,  Peskin,  Gonzalez 


010270        [Appropriation,  funding  for  earthquake  relief  to  India] 
Mayor,  Supervisor  Peskin 

Ordinance  appropriating  5100,000  from  the  General  Fund  Reserve  for  the  Indo-American  Trade  and 
Commerce  Council's  Gujarat  Earthquake  Relief  Fund  for  fiscal  year  2000-01. 
2/12/01,  RECEIVED  AND  ASSIGNED  to  Finance  Committee. 
Heard  in  Committee.  Speaker:  Harvey  Rose,  Budget  Analyst. 
RECOMMENDED  by  the  following  vote: 
Ayes:  3  -  Leno,  Peskin,  Gonzalez 


010273        [Appropriation,  funding  the  increase  of  services  of  the  Budget  Analyst] 
Supervisors  Ammiano,  Gonzalez 

Ordinance  appropriating  $218,208  of  the  General  Reserve  Fund  to  fluid  the  increase  of  services  provided  by 

the  Board  of  Supervisor's  Budget  Analyst  for  fiscal  year  2000-01. 

2/12/01,  RECEIVED  AND  ASSIGNED  to  Finance  Committee. 

2/20/01 ,  SUBSTITUTED.  Supervisor  Ammiano  submitted  a  substitute  ordinance  bearing  same  title. 

2/20/01,  ASSIGNED  to  Finance  Committee. 

Heard  in  Committee.  Speakers:  Supervisor  Ammiano;  Ken  Bruce,  Budget  Analyst's  Office;  Edward 
Harrington,  Controller. 
RECOMMENDED  by  the  following  vote: 
Ayes:  3  -  Leno,  Peskin,  Gonzalez 


City  and  County  of  San  Francisco 


Printed  at  7:39  PM  on  3/1/01 


Finance  Committee  Meeting  Minutes  February  28,  2001 


010223        [Transfer  of  state  funds  to  improve  access  to  mental  health  treatment  for  children  in  foster  care  and 
other  children  placed  outside  of  San  Francisco) 

Resolution  endorsing  the  transfer  of  state  general  funds  from  the  state  to  the  California  Mental  Health  Directors 

Association  for  a  contract  to  provide  services  to  foster  care  and  other  Medi-Cal  eligible  children  placed  outside 

of  San  Francisco.  (Public  Health  Department) 

2/2/01,  RECEIVED  AND  ASSIGNED  to  Public  Health  and  Environment  Committee. 

2/22/01,  TRANSFERRED  to  Finance  Committee. 

Heard  in  Committee.  Speakers:  Harvey  Rose,  Budget  Analyst;  Dr.  Albert  Eng,  Department  of  Public  Health. 
RECOMMENDED.,  by  the  following  vote: 

Ayes:  3  -  Leno,  Peskin,  Gonzalez 


ADJOURNMENT 

The  meeting  adjourned  at  1:51  p.m. 


City  and  County  of  San  Francisco  4  Printed  at  7:39  PM  on  3/1/01 


1 
a.8/01 


CITY  AND  COUNTY 


BOARD  OF  SUPERVISORS 


[Budget  Analyst  Report] 

Susan  Horn 

Main  Library-Govt.  Doc.  Section 


ofsanfrancisccOOCUMENTS  DEPT 
FEB  2  8  202) 


SAN  FRANCISCO 
PUBLIC  LIBRARY 

1390  Market  Street,  Suite  1025,  San  Francisco,  CA  94102  (415)  554-7642 


BUDGET  ANALYST 


FAX  (415)  252-0461 


February  22,  2001 


TO:  ^Finance  Committee 

FROM:        /Budget  Analyst 

SUBJECT:  February  28,  2001  Finance  Committee  Meeting 

Item    1      -File  00-2067 

Note:     This  item  was  continued  by  the   Finance   Committee  at  its  meeting  of 
February  21,  2001. 


Department: 
Item: 


Description: 


Public  Library 

Ordinance  amending  the  San  Francisco  Administrative 
Code  by  adding  Section  8.21-2  to  authorize  the  Library 
Commission  to  revise  certain  fines  and  fees  for  the  use  of 
library  materials  and  services  and  ratifying  prior  fines 
and  fees. 

The  proposed  ordinance  amends  Chapter  8  of  the  San 
Francisco  Administrative  Code  by  adding  Section  8.21-2, 
to: 

•  Add  a  fee  schedule  for  overdue  fines,  library  card 
replacement,  processing  fees,  replacement  of  lost 
materials,  lost/damaged  fees,  service  fees,  document 
delivery  and  special  services. 


Ratify  prior  fees  and  fines. 


Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 


Attachment  I,  provided  by  the  Public  Library,  provides  an 
overview  of  the  Library's  existing  and  proposed  fines  and 
fees,  as  contained  in  the  proposed  ordinance. 

Attachment  II,  provided  by  the  Public  Library,  identifies 
the  amount  of  change  for  each  fine  and  fee  and  provides 
an  explanation  of  the  differences  between  the  Public 
Library's  existing  fines  and  fees  and  the  proposed  fines 
and  fees.  According  to  Mr.  George  Nichols  of  the  Public 
Library,  the  largest  decrease  in  revenue  would  result  from 
the  elimination  of  both  the  $0.50  Interlibrary  Loan  Fee1 
and  the  $0.50  Reserve  Fee2,  which  are  proposed  to  be 
deleted  in  order  to  enhance  the  public's  use  of  the 
Library's  collection.  According  to  Mr.  Nichols,  eliminating 
the  Interlibrary  Loan  Fee  and  Reserve  Fee  will  result  in  a 
revenue  loss  of  approximately  $16,000  annually. 


One  of  the  proposed  new  fees  is  a  $10  fee  for  the  Recovei 
of  Delinquent  Accounts.  The  Public  Library  has  recently 
contracted  with  the  Unique  Management  Collection 
Agency,  selected  through  a  Request  for  Proposals  process, 
to  pursue  delinquent  accounts  that  are  90  days  late,  with 
a  total  value  of  at  least  $50.00  per  account.  According  to 
Mr.  Nichols,  this  new  $10  Recovery  of  Delinquent 
Accounts  Fee  would  cover  the  cost  of  the  collection  service 
as  well  as  the  Public  Library's  cost  of  processing  returned 
materials.  Of  the  $10  Recovery  of  Delinquent  Accounts 
Fee,  $8.95  would  be  paid  to  the  collection  agency  and 
$1.05  would  be  kept  by  the  Public  Library.  Mr.  Nichols 
states  that  although  the  Public  Library's  purpose  in 
implementing  this  collection  program  is  to  recover 
overdue  books  and  materials,  additional  revenue  will 
result  from  the  Recovery  of  Delinquent  Accounts  Fee  as 
well  as  from  fines  and  fees  paid  when  overdue  materials 
are  returned.  Furthermore,  Mr.  Nichols  states  that  costs 


1  The  $0.50  Interlibrary  Loan  Fee  is  currently  charged  to  Public  Library  patrons  when  they  request  a 
book  or  other  items  that  are  not  available  in  the  San  Francisco  Public  Library  system.  The 
Interlibrary  Loan  Fee  covers  the  cost  of  notifying  the  patron  that  the  material  requested  from 
libraries  in  other  jurisdictions  has  been  received  by  the  Public  Library  and  is  available  for  loan. 

2  The  $0.50  Reserve  Fee  is  currently  charged  to  Public  Library  patrons  when  they  request  a  book  or 
other  item  that  is  stocked  by  the  Public  Library  but  is  not  available  because  it  has  been  checked  out. 
The  Reserve  Fee  covers  the  cost  of  notifying  the  patron  that  the  material  requested  has  been 
returned,  placed  on  reserve,  and  is  available  to  be  checked  out. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 

would  be  avoided  as  returned  materials  would  not  have  to 
be  replaced. 

Comments:  1.  As  shown  in  Attachment  III,  provided  by  the  Public 

Library,  the  estimated  annual  revenues  to  be  realized 
from  the  Public  Library's  revised  fine  and  fee  schedule 
would  be  $521,060  which  is  approximately  an  increase  of 
8.4  percent  or  $40,475  more  than  the  actual  fines  and  fees 
of  $480,585  collected  by  the  Public  Library  in  FY  1999- 
2000. 

2.  Mr.  Nichols  states  that  the  amount  of  fines  and  fees  to 
be  collected  on  an  annual  basis  should  fully  recover  the 
Public  Library's  costs  including  the  costs  paid  to  the 
collection  agency  as  well  as  the  Public  Library's  costs  to 
replace  lost,  stolen,  or  damaged  materials  and  other 
related  processing  costs. 

3.  Attachment  rV,  provided  by  the  Public  Library, 
provides  information  as  to  how  the  proposed  fines  and 
fees  were  determined.  According  to  Mr.  Nichols,  the 
proposed  fines  and  fees  schedule  was  approved  on 
September  5,  2000  by  the  Library  Commission.  Mr. 
Nichols  reports  that  the  Public  Library's  fines  and  fees 
were  last  revised  in  1994. 

4.  According  to  Ms.  Susan  Hildreth  of  the  Public  Library, 
the  only  fine  or  fee  not  currently  in  effect  is  the  $10 
Recovery  of  Delinquent  Accounts  Fee. 

5.  According  to  Mr.  Buck  Delventhal  of  the  City 
Attorney's  Office,  prior  to  the  City's  1996  Charter,  the 
Library  Commission  had  the  authority  to  set  the  Public 
Library's  fines  and  fees.  In  accordance  with  the  1996 
Charter  Section  2.109,  the  Board  of  Supervisors  must 
approve  by  ordinance  any  rate,  fee,  or  similar  charge  to  be 
imposed  by  any  City  department.  Currently  there  is  no 
section  in  the  City's  Administrative  Code  for  Library  fines 
and  fees.  Mr.  Delventhal  states  that  the  proposed 
ordinance  would  establish  the  fines  and  fees  of  the  Public 
Library  as  well  as  ratify  (a)  the  existing  fines  and  fees  and 
(b)  the  proposed  revised  fines  and  fees. 


BOARD  OF  SUPERVISORS 

BUDGET  ANALYST 
3 


Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 

6.  Ms.  Hildreth  was  requested  to  report  back  to  the 
Committee  with  respect  to  the  Committee's  concerns 
pertaining  (a)  to  the  collection  agency  contract  and 
procedures  and  (b)  various  other  Library  policies  and 
procedures. 

Recommendation:  Approval  of  the  proposed  ordinance  is  a  policy  matter  for 

the  Board  of  Supervisors. 


BOARD  OF  SUPERVISORS 

BUDGET  ANALYST 

4 


'Attachment  I 
Paze  1  of  2 


„    viwaa. 

LIBRARY  FINES  FEES 

-  "—{3  w 

ss»^s^5sa 

iBUsfcayi 

BlH 

ADULT 

TEENS 

JUVENILES 

ADULT                TEENS 

JUVENILES 

FINES 

Per  Day  |    Max    |  Per 

Day  |     Max 

Per  Day  |    Max    |    |  Per  Day  |    Max 

Per  Day  |    Max 

Per  Day  I    Max 

Books 

S    0.10  IS    5.00  |  $ 

-     IS     - 

S     -     IS     -     I     IS    0.10  IS    5.00 

S     -     IS     - 

$    -    |$    - 

Fhonorecords 

S    0.10  |  S    5.00  I  S 

-     IS     - 

S     -     |S     -     I     IS    0.10IS    5.00 

s    -    is    - 

s    -    Is    - 

Audio  Cassettes 

S    0.10  I  S    5.00 

S 

-    is    - 

S     -     IS     -     | 

S    0.10  |S    5.00 

s   -    Is    - 

S     -     IS     - 

Books  on  Tape 

S    0.10  I  $    5.00 

s 

-     IS     - 

s    -    Is    -    |  • 

S    0.10  I  S    5.00 

s    -    is    - 

$    -    IS    - 

Compact  Discs 

I 
S    0.50  |  S  10.00 

$ 

-    is    - 

S     -     1 S     -     1     1  S    0.10 1  S    5.00 1  $     - 

s    - 

S    -    13     - 

Magazines 

S    0.10  I     Cost    i  i 

-     IS     - 

S     -     |S     -     MS    0.10  IS    5.00  Is     - 

s    - 

s    - 

s    - 

Paperback  (Catalogued) 

S    0.10  I  S    5.00  |  S 

-     IS     - 

S     -     IS     -     I 

S    0.10  |  S    5.00  |  S     - 

s    - 

s    - 

s    - 

Paperback  (Uncatalogued) 

S    0.10 

S    0.50 

s 

-    Is    - 

s    - 

.    .   I 

S    0.10  !  S    2.00 

s    - 

s    - 

s    - 

s    - 

Art  Prints 

S    1.00  |  S  10.00 

I 

-    is    - 

s    - 

S     •     I 

s    -    Is    - 

s    - 

s    - 

s    - 

s    - 

Video  &  DVD 

S    1.00 

S  10.00 

s 

1.00 

S  10.00 

S    1.00 

S  10.00  ! 

S    1.00 

S    5.00 

s    - 

s    - 

s    - 

s    - 

Supplemental  Materials/Booklets 

S    0.25  I  $    3.00  |  S 

-     IS     - 

s    -    Is    -    |   is    - 

s    - 

s    - 

s    - 

S    -    !-S    - 

Sheet  Music 

Varies 

Varies 

$ 

-     IS     - 

s    - 

s    • 

S    0.10 

S    5.00 

s    - 

s    - 

s    - 

s    - 

Orchestral  Material/Music  Sets 

S    0.25  !  S  10.00 

3 

■   is   - 

S     -     IS     -     I    j  S    0.25 1 S  10.00 

s    • 

s    - 

S     -     IS     - 

Vertical  File  Materials 

$    0.10  IS    5.00  |  S 

-     IS     - 

S     -     |  S     -     I     |  S    0.10 1  S    5.00 

s    - 

s    - 

S     -     IS     -     I 

FEES 

Per  Day  j     Max    |  Per  Day 

Max 

Per  Day 

Max 

Per  Day 

Max    j  Per  Day 

Max 

Per  Day 

Max 

Library  Card  Replacement 

Vl~ 

S     2.00  |%5   --■ 

S    0.50 

Wi 

S    0.50 

-  81 

s  1.00  teasS? 

S    0.50 

_-T  :-^: 

S    0.50 

Visitors  Card  (Non-California  Resident) 

S  20.00 

S  20.00 

S  20.00 

-M 

S  10.00 

S  10.00 

S  10.00 

Processing  fee  (lost  catalogued  material) 

~--7Zj^r 

S    5.00 

S   5.00  h^dggg 

S    5.00  | 

...---  -"■•:. 

S    5.00 

"->-.:-/. 

S    5.00 

7:,---i 

S    5.00 

Processing  fee  (lost  uncatalogued  material)    \OM¥~: 

S    2.00  k-~     --I  S    2.00  fjjgjgaa 

S    2.00  I 

-:'.-;i"': 

s    - 

rjM.':t 

S     ■     I 

Books  by  Mail 

s    - 

■■: ;  % 

s    - 

;->;:-.-" 

S     •     I 

~S^S 

S    3.00 

y--: 

S    3.C0 

::- 

S    3.00 

Interlibrary  Loan  (ILL) 

- 

S    0.50 

i-Sz-: 

S    0.50 

J.Ii}-.- 

S    0.50  ! 

:'■  % 

s    - 

s    - 

s    ■ 

Reserve  Fee 

S    0.50 

\ 

S    0.50  \i'.^£- 

S    0.50  j 

'^W 

s    - 

:>f-: 

s    • 

s    • 

Returned  Check  Fee                                  |  perChk. 

S  10.00  I  -        "  IS  10.00  1    V~v: 

N/A    I    |  perChk. 

s  10.00 1  :- 

S  10.00 

' 

N/A 

Recovery  of  Delinquent  Accounts 

s    •    1  -.-:-: 

r 

i  m 

i    I  perAcct 

S  10.00 

- 

I 

Interlibrary  Loan  (ILL)  Photocopy  Fee            |  per  page 

S    0.15;perpage 

S    0.15  |  per  page 

S    0.15  '     I  per  page 

S    0.25 

per  page 

S    0.25  t  per  page 

S    0.25 

SF  History  Center  Photocopy  Fee                 I  per  photc 

S    1.00  i  per  photc  S    1.00  !  per  photc 

S    1.00  :    I  per  photc 

S    1.00 

per  photc 

S    1.00  |  per  photc 

S    1.00 

SF  History  Center  Reproduction  Fee 

S  15.00  i_„           |S  15.00  !-:--/- 

S  15.00  |     | 

S  15.00 

- 

S  15.00  I  ------,?, 

S  15.00 

Barcode  Label 

Ec£    :1 

S    0.25  I              |S    0.25  I- 

S    0.25  : 

S    0.25 

S    0.25  I 

S    0.25 

Damaged  Barcode  &  Flyleaf 

S     - 

IS     -     !-■ 

i     ■     ■     \ 

S    1.00 

-     - 

5    1.00  [  .. 

S    1.00 

I  Crayoning  a  single  page 

S    0.25 

S    0.25 

%    0.25  '     I  :       ' 

s    • 

% 

S     - 

s    - 

|  Damaged  Date  Due  Slip 

S    0.10 

$    0.10  i    .  '     •": 

i   i  :   -- 
s  o.io ;   I  s*5l 

s    - 

s    - 

- 

s    • 

I 

1 
1 

1 

|  Damaged  Mylar  Book  Cover 

S    0.25  I 

S    0.25  | 

S    0.25  ' 

s    - 

s    - 

" 

s    - 

i 

|  Damaged  Plastic  PD  Sleeve 

S    1.00 

!' 

S    1.00 

|      -        i 

I 

I     .     - 

S    1.00 

1 

Is    • 

. 

s    - 

s    - 

Source:  SF  Public  Library 


12f'.9«J8'. 


LIBRARY  FINES  FEES 


Attachment  I 
Page  2   of  2 


■:--■:    CURRENTS .-_■■.:■•■ 

ADULT                  TEENS             JUVENILES 

PROPOSED 
ADULT                 TEENS            JUVENILES 

REPLACEMENT  COSTS 

Per  Item |     Max      Per  Item |     Max    |  Per  Item      Max    |      Per  Item |     Max    |  Per  llern)     Max    |per!tem|     Max 

Hardback  Non-fiction 

S  25.00  |  $  30.00 

S  25.00  I  S  30.00  I  S  12.00  I  S  17.00  I     I  S  35.00  I  $  40.00  |  S  35.00 

S  40.00  I  S  20.00  |  S  25.00 

Hardback  Fiction 

$  18.00  |  $  23.00 

S  18.00  I  S  23.00  I  S  12.00  I  S  18.00  i     I  S  25.00    S  30.00  |  $  25.00 

S  30.00 

S  15.00 

S  20.00 

Paperback  Catalogued  Non-fiction 

S     -       $  15.00  |  $     -     |  $  15.00  IS     -     |  $  10.00  1    |  S  20.00  I  $  25.00  !  $  20.00  |  S  25.00 

S  10.00 

S  15.00 

Paperback  Catalogued  Fiction 

J     - 

$    5.00  I  S     -     I  $    5.00  I  $      -     |  S    5.00  I     |  $  10.00 

S  15.00 

S  10.00 

S  15.00 

S    5.00  |  S  10.00 

Paperback  Uncatalogued 

S    5.00 

S     •     |S    5.00  IS     -     l$    5.00  IS     •     !    IS    5.00 

S     - 

S    5.00 

s    • 

S    5.00  |  S     • 

PB/HB  International  Generic  Record 

S    5.00  1  $  10.00  IS    5.00  I  S  10.00  I  S    5.00  I  $  10.00  I     I  $    5.0C  |  J  15.00 

S    5.00 

S  15.00 

S    5.00  I  S  15.00 

Periodicals/Magazines 

S    3.00  I  $     -     |  S    3.00  I  S     -     |  S    3.00  |  S     •     |     I  S    5.00  |  S     - 

S    5.00 

s    - 

S    5.00  IS     ■ 

Phonorecords 

S    9.00  |S     -     |  S    9.00 

S     -     I  S    9.00  I  S     -     I     |$  15.00  I  S  20.00 

S  15.00 

S  20.00 

S  15.00 

S  20.00 

Audio  Cassettes 

S  11.00  js     -     IS  11.00 

S     -     I  S  11.00  I  S     -     I    I  S  10.00  I  s     - 

S  10.00 

s    - 

S  10.00 

s    - 

Videos 

VARIES  I  VARIES  I  VARIES  I  VARIES  I  VARIES  I  VARIES  I     I  S  20.00  I  S  25.00 

S  20.00 

S  25.00 

S  20.00 

s  29 :: 

Digital  Video  Disc  (DVD) 

S     -     I  S     -     I S     -     I S     -     I S     -     |  S     -     |    |  S  20.00 1  S  25.00 

S  20.00 

S  2500  I  S  20.00 

S  25.00 

Audio  Books 

$    5.00  I  per  tape  JS    5.00  I  per  tape  !  $    5.00  J  per  tape  '     IS    5.00 

per  tape 

S    5.00 

per  tape  '.  S    5.00 

per  tape 

Sheet  Music  Scores 

I  SET  BY  ART  DEPARTMENT  I 

SET  BY  ART  DEPARTMENT 

Sheet  Music  (Uncatalogued) 

I  SET  BY  ART  DEPARTMENT 

•mat 

SET  BY  ART  DEPARTMENT 

Compact  Discs 

VARIES  I              I  VARIES 

VARIES 

S  I5J0C 

12000 

S  15.00  I  S  20.00 

S    3.00 
S  15.00 

■   '■    -■  1 — 1 

S  20.00  1 

Language  Sets 

S  10.00  I 

S  10.00  |  : 

S  10.00  1  3 

1  S  10.00 

s  10.00  Ke$p# 

s  •:  x 

Vertical  File/Picture  File 

S      Z00|:<-1 

S    2.00 

£  -  — 

S    Z0OK 

>  S    5.00 

S    5.00 

S    5.00 

-:-•-. 

Lost  Audio  Cassette  Case 

S    1.00 

S    1.00 

S    1.00  I- 

IS    1.00  If 

S    1.00  R! 

S    1.00 

Lost  Videocassette  Case 

S    3.00 

- 

S    3.00 

S    3.00  t  r 

IS  zoo 

■ 

S    2.00  I  ;.- .-/.-■■- 

s   ZOO 

Lost  CD  Jewel  Case 

s    - 

- 

s    - 

s    -    1 

l$    1.00 

S    1.00  {— < 

S    1.00  |.ti 

Source:  SF  Public  Library 


i»tf»/oo 


LIBRARY  FINES  FEES 


Attachment   II 
Paee   1   ot    2 


jS5K%fr£-        -   rCH£NG&-^_-     -------     i                            EXPLANATION QF CHANGE 

ADULT                TEENS            JUVENILES 

FINES 

|  Per  Day  |    Max    |  Per  Day  |    Max    |  Per  Day  |    Max    | 

Books 

$     -  .IS     -     IS     -     IS     -     IS     -     IS     -     I 

Phonorecords 

s    -    Is    -    IS    -    |S    -    Is    - 

5     -     | 

Audio  Cassettes 

~Ts    -   Is    -   is   -   Is    -   is    - 

$   -   I 

Books  on  Tape 

is    -    Is    -    Is    -    IS    -    is    - 

s    -    I 

Compact  Discs 

I S  (0.40)  $  (5.00)1  $     -     1  $     -       $     - 

JDaRy  and  maximum  fines  reduced  so  that  they  wiB  be  consistent  with  other  daily 
$      -      |and  maximum  fines. 

Magazines 

fS     -     I  VARIES  i$     -     |S     -     |S     - 

S      -      iMaximum  fine  changed  so  that  it  win  he  consistent  with  other  maximum  fines. 

Paperback  (Catalogued) 

Is    -    Is    -    Is    -    is    - 

s    - 

$      .      | 

Paperback  (Uncatalogued) 

s    - 

S    1.50 

s    - 

s    - 

s    - 

[Maximum  fine  increased  as  an  incentive  for  patrons  to  return  material  in  a  timely 
$      •      |manner.  Current  maximum  of  SO. SO  is  not  sufficient 

Art  Prints 

I  S  (1.00)1  S(10.00)i  $     -     I  $     - 

S              |S              |  Don'l  have  art  prints  In  circulation  anymore. 

Video  &  DVD 

s    - 

S  (5.00)1  S  (1.00)|  S (10.00) 

lAdult  maximum  line  reduced  lo  make  it  consistent  with  other  maximum  fines.  Fees 
[eliminated  for  children  and  teens  consistent  with  policy  not  to  charge  late  fees  to 
$    (1.00)    $  (10.00)  jthis  group  of  users. 

Supplemental  Materials/Booklets 

S  (0.25)i  S  (3.00)1  $     -     1  S     - 

S      -      |S             litems  arem  catalogued  and  are  not  tracked.  Fines  not  generally  assessed. 

Sheet  Music 

VARIES 

VARIES  I  S     - 

s    - 

$      - 

lOaflY  and  maximum  fines  changed  so  that  they  would  be  consistent  with  other  daly 
$      -      jand  maximum  fines. 

Orchestral  Material/Music  Sets 

is    -    Is    -    Is    -    Is    - 

s    - 

$   -   i 

Vertical  Hie  Materials 

Is    -    Is    •    is    -    IS    -    is    - 

s   -   I 

FEES 

Per  Day 

Max    j  Per  Day 

Max 

Per  Day 

EXPLANATION  OF  CHANGE 

Library  Card  Replacement 

■  £vi;= 

S  (1.00)!  ffi 

5     - 

•~i:j}r- 

[purchasing  a  debit  card  lor  S1.00  and  registering  it  as  a  library  card.  Registration  is 
free.  The  Library  will  continue  to  charge  $1.00  to  patrons  who  do  not  want  to  buy  a 
S       •       Ideal  card. 

Visitors  Card  (Non-California  Resident) 

,_"  vfprfe 

S  (10.00) 

.  .-■"; 

S  (10.00) 

S?4ir4. 

jCurrent  (ee  includes  J 1 0  refundable  deposit  after  3  months.  Oeposil  was  imposed 
to  ensure  return  of  materials.  Currently,  most  non-State  cards  are  issued  for 
$  (10.00)  [internet  access  and  not  for  books.  Consequenby,  the  deposit  is  not  required. 

Processing  fee  (lost  catalogued  material) 

--.,-':  ;.F.~ 

s     -    I    - 

s    - 

.- :.-_;  ;-.-.. 

s    -    I 

Processing  fee  (lost  uncatalogued  material) 

v^:::-: 

S  (2.00)!   t- 

S  (2.00)h-- 

S   (2.00) [coded. 

Boofcs  by  Mail 

;  "'.'f^y' 

S    3.00 

--■' 

S    3.00 

-yW-: 

INew  fee.  Covers  cost  of  shipping  and  handling  of  books  that  are  mailed  to  patrons. 
S     3.00  'Actual  amount  charge  will  be  S3  or  the  actual  cost  of  shipping  and  handling. 

Interlibrary  Loan  (ILL) 

;':'■;■'-.- 

S  (0.50) 

-'    . 

S  (0.50) 

•'■■ 

[Fee  eliminated  to  enhance  the  use  of  the  collection  and  to  improve  public  service. 
S   (0.50),  Fees  deter  patrons  from  access  to  collection.  Very  minimal  impact  on  revenue. 

Reserve  Fee 

S  (0.50) 

S  (0.50) 

■ 

iFees  deter  patrons  from  access  to  collection.  Very  minimal  impact  on  revenue. 
jMost  reserves  are  made  via  email/computer  eliminating  the  cost  of  post  card  and 
S   (0.50)!postage. 

Returned  Check  Fee 

\-y-:-^r 

$     -     I 

s    - 

'-  .- 

N/A     I 

j  Recovery  of  Delinquent  Accounts 

per  AccL 

s  10.00!    .  ■■- 

s    - 

,New  fee.  Library  has  contracted  with  a  collection  service  lo  pursue  materials  that    | 
S       -      iare  90  days  late  and  valued  over  550. 

i  Interlibrary  Loan  (ILL)  Photocopy  Fee                I  per  page 

S    0.10  i  per  page 

S    0.10  I  per  page 

S     0.10   Increased  to  reflect  cost  of  copying. 

I  SF  History  Center  Photocopy  Fee                 I    I  per  photc 

S     -     I  per  photd  S     -     I  per  photc 

$       - 

i  SF  History  Center  Reproduction  Fee            I    |  -•  •  ■  ■..- 

S     -     I 

S     -     |-js 

$      -       i 

Barcode  Label 

$     -     I 

S     -     I",'    ■ 

S     -     I                                                                                         i 

Damaged  Barcode  &  Flyleaf                       I    |    -'-■-:-- 

s    1.00  i 

s  1.00 1 

$     1.00    labor  intensive  process  if  bar  code  is  damaged. 

i  Crayoning  a  single  paqe                            |    l~-'i-  ':> 

S  (0.25}| 

S  (0.25) 

:Fee  eliminated  as  it  is  difficult  or  impossible  lo  determine  whether  damage  was  a     | 
$    (0.25)  pre-exJsbng  condition.  Administratively  unenforceable. 

i  Damaged  Date  Due  Slip 

S  (0.10)1    ■" 

S  (0.10)1 

[Fee  eliminated  as  it  is  difficult  or  impossible  to  determine  whether  damage  was  a     I 
S    (0.10)  pre-existing  condition.  Administratively  unenforceable. 

I  Damaged  Mylar  Book  Cover 

S  (0.25)1 

S  (0.25)1  " 

■Fee  eliminated  as  it  is  difficult  or  impossible  to  determine  whether  damage  was  a     I 

$    (0  25)'pre-exi50ng  condition.    Administratively  unenforceable. 

I    {"'•■•■•-" 
I  Damaged  Plastic  PD  Sleeve                          I          - 

S  (1.00)! 

S  (1.00)| 

;Fee  eliminated  as  It  is  difficult  or  impossible  to  determine  whether  damage  was  a 
$   (1.00)  pre-existing  condition.  Administratively  unenforceable. 

-ME0000a.xls 

Source:    SF   Public   Library 

"iiy&rao 


LIBRARY  FINES  FEES 


CHANGE 


TEENS  JUVENILES 


Attachnent    II 
Pa<*e   2   of    2 


EXPLANATION  OF  CHANGE 


REPLACEMENT  COSTS 

Per  Item 

Max 

Per  ltem|    Max 

Per  Item 

Max 

EXPLANATION  OF  CHANGE 

Hardback  Non-fiction 

Hardback  Fiction 

I  S    7.00  1  $    7.00  |  $    7.00  1  $    7.00  1  J    3.00  1  $    100  1 

Paperback  Catalogued  Non-fiction 

$  20.00  1  $  10.00  I  $  20.00  i  J  10.00  |  $  10.00  |  $    5.00 

Paperback  Catalogued  Fiction 

$  10.00  I  $  10.00  i  $  10.00  j  %  10.00  I  $    5.00 

$    5.00 

Paperback  Uncatalogued 

1$ 

$     - 

PB/HB  International  Generic  Record 

S     -     |$    5.00  IS     -     1 5    5.00 1  $     ■ 

$    5.00  ;  Revised  amounts  reflect  current  replacement  costs  for  various  materials. 

Periodicals/Magazines 

S    2.00  1$     -     I  $    2.00 1 5     - 

$    2.00  I  $      -      |These  amounts  are  used  only  when  materials  cannol  be  located  or  found 

Phonorecords 

$    6.00j$  20.00  1$    6.00  1  $20.00 

$    6.00  |  $  20.00  I  through  a  bibfographic  services  such  as  Amazon.Com  or  Bowken  Annual 

Audio  Cassettes 

$  (1.00)1  $     -     I  $  (1.00)|  $     - 

$  (1 .00)  |  $      -      |  Estimated  that  less  than  5%  of  materials  cannot  be  located  through  these 

Videos 

|  VARIES  1  VARIES  1  VARIES  1  VARIES  I  VARIES  1  VARIES  Isources.  The  Library  will  assess  fair  markel  value  for  lost  item*  based  on 

Diqital  Video  Disc  (DVD) 

$  20.00  1  $  25.00  i  $  20.00  !  $  25.00  1  $  20.00  1  $  25.00 

quotes  from  bibliographic  sources.  Replacement  chanjes  are  in  addition  to 

Audio  Books 

$     - 

N/A     |  $     -     I     N/A     I  $     -     I     N/A 

processing  fees. 

Sheet  Music  Scores 

|  NO  CHANGE 

Sheet  Music  (Uncatalogued) 

I  NO  CHANGE 

Sup.  Materials  (I.e.,  booklets,  maps,  etc.) 

$      - 

.     Is    -    I  -    ■•-.!$    - 

Compact  Discs 

VARIES 

$  20.00  I  VARIES  I  $  20.00  I  VARIES 

$  20.00  |New  fee.  OVOs  a  growing  part  of  the  Library's  circulation. 

Language  Sets 

S     - 

$     -     I 

$      - 

.•;';•:• 

Vertical  File/Picture  File 

$    3.00 

■'■--"--    - 

$    3.00  |  * 

$    3.00 

w- -   - 

Lost  Audio  Cassette  Case 

$     - 

$     -     I 

$     - 

:-:~ 

Lost  Videocassette  Case 

$  (1.00) 

- 

$  (1.00)1  -. 

$  (1.00) 

• 

Lost  CD  Jewel  Case 

$    1.00 

$    1.00  | -' 

$    1.00 

1 

Source:  SF  Public  Library 


2/20/01 


Attachment  III 


DEPARTMENTAL  REVENUE 
Public  Library 


ACTUAL  PROJECTED 

FY  1999-2000  ANNUAL  REVENUE 


Books  Paid 

$ 

43,261 

$ 

41,548 

Fines  &  Fees 

$ 

418,819 

$ 

479,512 

Reserves 

$ 

14,814 

$ 

- 

ILL  Fee 

$ 

3,691 

$ 

- 

480,585    $ 


521,060 


FY  1999-00  per  FAMIS. 

No  decreases  in  departmental  revenues  are  expected  as  a  result  of  the  proposed 

fine  and  fee  schedule. 


Attachment    IV 
a',  ,  '  Page    1    of    2 

'  .:V  .  SUPPLEMENTAL  MATERIAL 

FINES  &  FEES  ORDINANCE  AND  FORTUNIO  RESOLUTION 

December  19,2000 


FINES  &  FEES 

How  were  fines  &  fees  determined?  What  process  did  the  library  qo  through  to 
determine  the  new  fee  schedule? 

The  revision  of  the  fines  and  fees  schedule  has  been  under  consideration  by  the  Library 
for  more  than  seven  years  (since  1994).     The  key  factors  considered  in  this  review 
were  customer-friendly  policies  and  policies  that  best  protected  the  Library's  collection. 
Fines  and  fees  schedules  for  other  public  libraries  in  the  Bay  Area  were  surveyed  to 
determine  regional  benchmarks  and  best  practices  in  this  area.  The  impact  of  newer 
formats,  services  and  technologies  also  was  a  determining  factor  in  revising  the  fines 
and  fees  schedule.  For  example,  the  implementation  of  a  vendor-supplied  debit  card  - 
which  provides  library  cards  with  $1 .00  photocopy  value  for  the  price  of  $1 .00  -  was 
inconsistent  with  the  standard  library  charge  of  $2  for  a  replacement  library  card.  Other 
new  services  include  the  implementation  of  a  collection  recovery  program  aimed  at 
protecting  the  collection  (see  below  for  details)  and  a  books-by-mail  service  for 
customer  convenience. 

The  fines  &  fees  schedule  was  determined  after  many  meetings  of  the  public  services 
staff  and  review  and  approval  by  the  Library  Commission  at  several  public  meetings. 
The  proposed  schedule  reflects  modern  techniques  of  pricing  materials  and  includes 
new  media  formats  (DVD).  One  of  the  most  important  changes  for  customer  service  is 
the  elimination  of  the  $.50  charge  for  reserves  for  materials  owned  by  the  Library  and 
materials  borrowed  from  other  libraries.  Elimination  of  this  charge  makes  the  entire 
collection  available  for  anyone's  use,  no  matter  which  branch  they  choose  to  visit.  The 
proposed  fines  and  fees  schedule  was  devised  to  serve  as  an  incentive  plan  to  return 
materials  in  a  timely  manner. 

What  is  the  relationship  between  the  fines  assessed  and  the  cost  to  the  library? 

Fines  for  overdue  materials  act  as  an  abatement  to  the  cost  of  sending  out  notices  that 
remind  people  to  return  their  materials.  The  cost  of  replacement  of  lost  materials  has 
been  modified  to  reflect  that  the  most  up-to-date  information  sources  will  be  checked  to 
determine  that  cost.  If  that  information  is  not  available,  then  a  default  "standard  price"  of 
materials  will  be  used,  which  is  based  on  current  average  pricing  for  materials.  The 
application  of  a  consistent  "processing  fee"  attempts  to  recover  a  portion  of  the  library's 
investment  in  the  average  cost  of  cataloging  and  processing  materials.  If  there  is  no 
processing  or  cataloging  (i.e.  paperback  books),  we  are  recommending  that  the 
processing  fee  not  be  applied. 

The  Library's  Mission  Statement  states  "The  Library  is  dedicated  to  free  and  equal 
access  to  information...."    To  effect  this  mission,  the  public  and  the  staff  believe  that  it  is 
in  the  best  interest  of  the  library  to  make  all  of  its  materials  accessible  via  reserves  to  all 
patrons  for  free.    Similarly,  since  we  are  not  charged  for  the  interlibrary  loan  of  books 
from  other  libraries,  the  staff  and  public  believes  the  Library  should  not  charge 
customers  for  access  to  the  materials  of  other  libraries. 


Source:  SF  Public  Library 
10 


Attachment   IV 
Page   2  o.t   2 

SUPPLEMENTAL  MATERIAL 
FINES  &  FEES  ORDINANCE  AND  FORTUNIO  RESOLUTION 

December  19,  2000 


How  will  the  collection  program  work?  Who  gets  referred  and  what  criteria  will  be 
used? 

Customers  who  have  not  returned  materials  worth  more  than  $50.00  that  are  more  than 
45  days  overdue  will  be  electronically  sent  to  the  Collection  Agency  by  the  Library's 
automated  system.  Currently,  library  customers  receive  only  one  notice  when  material  is 
overdue.  With  the  Collections  process,  the  Library  will  implement  a  second  overdue 
notice  to  alert  customers  that  not  returning  materials  may  result  in  the  referral  of  their 
account  to  a  collection  agency.  We  have  a  written  agreement  with  the  Tax  Collector  to 
assume  this  collection  duty  through  a  third  party  library  vendor.  We  believe  that  lowered 
fines  and  fees  combined  with  a  collection  agency  program  will  stimulate  both  the  use 
and  the  return  of  library  items. 


Source:  SF  Fublic  Library 
11 


Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 

Item  2 -File  01-0105 


Department: 
Item: 


Public  Works 

Ordinance  amending  the  Administrative  Code  by  adding 
Section  8.40  to  authorize  the  Department  of  Public  Works 
to  charge  license  fees  for  the  use  of  the  City's  Base  Map 
Geographic  Information  System  ("GIS")  data  and 
ratifying  the  establishment  of  existing  and  new  license 
fees. 


Description: 


The    proposed    ordinance    amends    Chapter    8    of   the 
Administrative  Code  by  adding  Section  8.40,  to: 


Authorize  the  Department  of  Public  Works  (DPW)  to 
"charge  license  fees  thereunder  that  are  consistent 
with  the  fair  market  value  of  the  GIS,"  and  to 
establish  reduced  rates  for  non-profit  organizations  as 
determined  by  the  Director  of  DPW.  The  proposed 
ordinance  does  not  identify  the  specific  fee  levels. 
Authorize  the  appropriation  of  the  fees  to  the  DPW  for 
maintenance  of  the  Base  Map  GIS  data. 
Ratify  existing  license  fees. 


The  proposed  ordinance  provides  authority  for  the 
Director  of  DPW  to  establish  license  fees  at  fair  market 
value  for  the  use  of  the  City's  Base  Map  GIS  data  and 
that  the  Director  "may  establish  standard  reduced  fee 
rates  for  non-profit  organization  licensees  of  the  GIS." 

The  DPW  Office  of  Geographical  Data  Services  has 
developed  and  maintains  the  City's  Base  Map,  which  is 
formatted  for  and  accessed  through  GIS  software.  The 
Base  Map  is  comprised  of  all  the  Assessor's  blocks  and 
lots,  the  City's  right  of  way  maps,  information  on  the 
location  and  dimensions  of  curbs  and  pavement,  utility 
lines,  land  use  zones,  street  trees,  streetlights,  and 
seismic  hazard  zones.  City  departments  use  the  Base  Map 
GIS  data  for  a  variety  of  purposes,  including  facilitating 
the  street  construction  permitting  process,  managing  the 
sewer  and  water  main  system,  and  assessing  earthquake 
risk. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

12 


Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 


According  to  Mr.  Douglas  Legg  of  the  DPW,  DPW  would 
charge  license  fees  to  third  parties  through  license 
agreements  with  Value  Added  Resellers  (VARs)  for  the 
use  of  the  City's  Base  Map  GIS  data.  According  to  Mr. 
Legg,  third  parties  include  architectural  and  planning 
consulting  firms,  market  research  firms,  cartographic 
firms,  and  telecommunications  entities.  To  facilitate  the 
demand  by  third  parties  for  the  City's  Base  Map  GIS 
data,  according  to  Mr.  Legg,  the  City  Attorney  prepared 
license  agreements  between  DPW  and  VARs.  Under 
contract  with  the  City,  the  VARs  are  authorized  to  sub- 
license the  City's  Base  Map  GIS  data  to  third  parties. 
According  to  Ms.  Tina  Olson  of  DPW,  the  VAR 
agreements  are  not  subject  to  Board  of  Supervisors 
approval  because  under  Charter  Section  9.118  the  VAR 
agreements  that  do  not  have  anticipated  revenue  to  the 
City  of  $1  million  or  more  do  not  require  approval  by  the 
Board  of  Supervisors.  The  VARs  re-package  the  Base  Map 
GIS  data,  and  their  products  may  include  software  and 
training. 

DPW  began  charging  fees  to  various  City  departments 
and  the  San  Francisco  Redevelopment  Agency  in  FY 
1996-97  to  pay  for  the  development  and  maintenance  of 
the  City's  Base  Map  GIS  data.  Presently,  DPW  has  work 
orders  from  12  City  departments,  the  San  Francisco 
Redevelopment  Agency  and  5  DPW  bureaus.  According  to 
Mr.  Legg,  DPW  entered  into  license  agreements  with 
three  VARs,  namely  Barclay  Mapworks,  ValueCad,  and 
Hammon,  Jensen,  Wallen  and  Associates  in  October  of 
1998  to  market  and  sub-license  the  City's  Base  Map  GIS 
data  to  third  parties.  According  to  Mr.  Legg,  these  three 
VARs  were  selected  based  on  their  familiarity  with  the 
City's  Base  Map  GIS  data  and  experience  with  marketing 
GIS  data  to  third  parties.  Under  current  agreements  with 
the  three  VARs,  which  as  previously  noted  are  not  subject 
to  Board  of  Supervisors  approval,  DPW  receives  on  a 
quarterly  basis  (1)  50  percent  of  the  gross  revenue 
collected  by  the  three  VARs  from  sub-licensing  the  City's 
Base  Map  GIS  data  to  third  parties,  up  to  the  fair  market 
value  (listed  price)  of  the  data  product,  which  is  currently 
$25,000  as  established  by  the  Director  of  DPW,  and  (2)  10 
percent  of  gross  revenue  from  products  developed  from 
the  Base  Map  by  the  VARs. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

13 


Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 

According  to  Mr.  Legg,  DPW's  future  share  of  the  annual 
revenue  collected  by  the  VAEs  from  sub-licensing  the 
City's  Base  Map  GIS  data  to  third  parties  is  expected  to 
total  $65,000.  However,  DPW  has  only  collected  $38,676 
from  October  of  1998  through  February  22,  2001.  Mr. 
Legg  reports  that  the  Department  anticipates  entering 
into  new  licensing  agreements  in  September  of  2001  with 
VAEs  upon  the  expiration  of  the  existing  agreements,  and 
that  DPW  estimates  annual  revenues  of  $65,000 
beginning  in  FY  2001-02,  or  $45,000  more  than  the 
estimated  revenue  anticipated  to  be  realized  in  FY  2000- 
01  of  $20,000. 

As  shown  in  the  Attachment  provided  by  DPW,  the  cost  of 
maintaining  the  City's  Base  Map  GIS  data  is  estimated  at 
$538,676  for  FY  2001-02,  and  would  be  covered  by  the 

: Zl following    estimated    funding    sources:    (1)    $400,000    in 

revenue  from  the  budgeted  work  orders  for  the  City's  Base 
Map  GIS  data  provided  by  the  12  City  departments,  the 
San  Francisco  Redevelopment  Agency  and  5  DPW 
bureaus  which  participate,  (2)  $65,000  in  revenue  from 
sub-licensing  through  VARs  the  City's  Base  Map  GIS  data 
to  third  parties,  (3)  $38,676  in  revenue  collected  since 
October  of  1998  from  sub-license  fees  for  use  by  third 
parties  of  the  City's  Base  Map  GIS  data,  and  (4)  $35,000 
in  consulting  fees  charged  by  DPW  to  provide  technical 
assistance  to  other  City  departments.  According  to  Mr. 
Legg,  the  $38,676  has  never  been  allocated  to  DPW. 
Therefore,  the  appropriation  of  the  $38,676  in  fees 
previously  collected  would  be  appropriated  to  the  DPW 
under  this  ordinance. 

Comments:  1.   As  noted  in  the  Attachment  provided  by  DPW,  DPW 

currently  has  work  orders  from  12  City  departments,  the 
San  Francisco  Redevelopment  Agency  and  5  DPW 
bureaus  for  the  Base  Map  GIS  data.  According  to  DPW, 
the  work  order  revenues  from  the  agencies  are  estimated 
to  total  $400,000  annually. 

2.  Mr.  Legg  states  that  in  September  of  2001,  when  the 
existing  VAR  license  agreements  expire,  DPW  may  enter 
into  an  exclusive  agreement  with  one  VAR  selected 
through  a  competitive  bidding  process.  That  agreement 

BOARD  OF  SUPERVISORS 

BUDGET  ANALYST 

14 


Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 


would    not    be    subject    to    approval    by    the    Board    of 
Supervisors. 

3.  According  to  Ms.  Adine  Varah  of  the  City  Attorney's 
Office,  although  Charter  Section  2.109  provides  that  the 
Board  of  Supervisors  must  approve  by  ordinance  any  rate, 
fee,  or  similar  charge  to  be  imposed  by  any  City 
department,  the  City  Attorney's  Office  has  concluded  that 
Section  2.109  does  not  apply  to  the  DPW  GIS  Base  Map 
data  license  fees  because  the  DPW,  when  negotiating  and 
charging  such  intellectual  property  license  fees,  is 
representing  the  City  in  its  proprietary  capacity.  Such 
intellectual  property  license  fees  are  thus  distinguishable 
from  fees  charged  for  public  facilities  or  services  that  are 
generally  offered  to  the  community.  According  to  Ms. 
Varah,  therefore,  approval  of  this  ordinance  would  ratify 
the  existing  license  fees  and  authorize  the  Director  of 
JQP-W__to_establish_ne  w_hcense  ~fe  es_without_ subseqi 


approval  by  the  Board  of  Supervisors  of  the  specific  fees 
which  are  established  by  DPW. 

Currently  there  is  no  section  in  the  City's  Administrative 
Code  establishing  the  existing  DPW  license  fees  to  be 
charged  for  the  use  of  City's  Base  Map  GIS  data.  Ms. 
Varah  states  that  the  proposed  ordinance  would  authorize 
the  DPW  to  enter  into  licensing  agreements  with  VARs 
that  would  sub-license  third  party  use  of  this  Base  Map 
GIS  data  and  charge  license  fees  thereunder  for  the  use  of 
the  City's  Base  Map  GIS  data.  In  addition,  the  proposed 
ordinance  would  ratify  all  existing  fees  charged  by  the 
City  under  GIS  data  license  agreements  since  July  1, 
1998,  the  start  date  of  the  fiscal  year  in  which  the  City 
began  licensing  the  Base  Map  GIS  data. 

Recommendation:  Approval  of  the  proposed  ordinance  is  a  policy  matter  for 

the  Board  of  Supervisors. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

15 


.City  and  County  of  San  Francisco 


Willie  Lewis  Brown,  Jr.,  Mayor 
Edwin  M.  Lee,  Director 


Attachment 

gage  1  of  2(415)  554_4830 

FAX  (415)  554-7800 
http://www.sfdpw.com 

Department  of  Public  Works 

Finance  and  Budget  Division 

Financial  Management  and  Administration 

City  Hall,  Room  348 

1  Dr.  Carlton  B.  Goodlett  Place 

San  Francisco,  CA  94102-4645 


Memorandum 


February  22,  2001 

To:       Anna  Weinstein 

Board  of  Supervisor's  Budget  Analyst's  Office 

From:  Douglas  Legg 

Division  of  Finance  and  Budget 


Re:       Proposed  GIS  Fee  Ordinance 

This  memo  is  in  response  to  questions  you  have  asked  regarding  the  Department  of  Public  Works 
proposed  GIS  fee  ordinance  and  appropriation. 


1. 


How  did  we  arrive  at  our  annual  revenue  estimate? 


2. 


The  estimate  is  based  on  revenues  collected  by  the  Counties  of  Santa  Clara  and  Los 
Angeles  and  reduced  in  proportion  to  San  Francisco's  relative  size.  The  estimates 
were  verified  through  discussions  with  potential  Value  Added  Resellers  (VARs). 

What  is  the  budget  for  the  Office  of  Geographic  Data  Systems?  How  will  DPW 
address  a  revenue  shortfall  if  proposed  fees  revenues  are  not  realized  as  planned? 


Expenses 

Salaries 

$233,727 

Fringe  Benefits 

51,420 

Overhead 

78,321 

Non  Labor 

26,532 

Ortho  Photos 

148.676 

Total 

$538,676 

Revenues 

Work  Orders 

$400,000 

License  Fees 

65,000 

Fee  Balance 

38,676 

Consulting 

35.000 

Total 

$538,676 

The  work  orders  are  as  follows: 

"IMPROVING  THE  QUALITY  OF  LIFE  IN  SAN  FRANCISCO"  We  are  dedicated  individuals  committed  to  teamwork,  customer 
service  and  continuous  improvement  in  partnership  with  the  community. 


Attachment 

Page  2  of  2 

Assessor/Recorder 

$20,000 

City  Planning 

20,000 

DBI 

46,000 

DPH 

20,000 

DPT 

20,000 

DPW-Bureau  of  Construction  Mgmt. 

35,000 

DPW-Bureau  of  Architecture 

20,000 

DPW-Bureau  of  Engineering 

20,000 

DPW-Bur.  Street  Environmental  Srvs 

20,000 

DPW-Bur.  Street  &  Sewer  Repair 

20,000 

DTIS 

20,000 

Fire  Department 

20,000 

Mayor's  OES 

19,000 

PUC-Bureau  of  Light,  Heat  &  Power 

20,000 

PUC-Clean  Water 

20,000 

Real  Estate 

20,000 

SFRA 

20,000 

Treasurer/Tax  Coll. 

20.000 

Total 

S400,000 

DPW  plans  to  update  the  Ortho  Photograph  layer  of  the  Basemap  in  the  current  fiscal 
year.  Ortho  photographs  were  last  updated  in  1993  and  the  Department  and  subscriber 
departments  are  anxious  to  for  this  more  accurate  and  timely  data.  Should  revenues  not  be 
realized  in  the  current  fiscal  year,  expenditure  of  some  non-labor  budget  items  or 
purchase  of  ortho  photographs  would  be  delayed  until  next  fiscal  year. 

3.  What  is  a  Value  Added  Reseller  (VAR)?  Why  is  DPW  "licensing"  VARs  to  sell  the 
Basemap  data? 

A  VAR  is  essentially  a  broker  who  markets  data  or  software  to  interested  buyers.  City 
staff  are  not  trained  at  marketing  or  managing  contracts  to  sell  data,  so  we  use  these 
brokers.  The  City  owns  the  Basemap  data,  and  licenses  the  VARs  to  sell  it.  The  VARs  in 
turn  sub-license  the  data  to  interested  buyers.  Under  DPW's  license  agreements  with  the 
VARs,  DPW  is  entitled  to  a  percentage  of  these  receipts.  Amongst  others,  the  VARs  have 
sub-licensed  the  City's  Basemap  to  e-commerce  map  companies,  and  technology 
companies  that  integrate  mapping  data  with  cell  phone  and  pager  technology. 

4.  How  did  DPW  decide  which  VARs  to  license  to  sell  Basemap  data?  How  will  DPW 
determine  which  vendors  will  be  licensed  in  the  future? 

The  staff  person  who  worked  with  the  City  Attorney  to  develop  the  license  agreements  is 
no  longer  with  the  City.  The  best  information  that  we  have  indicates  that  DPW  chose  the 
current  VARs  based  on  their  experience  with  similar  municipal  organizations  and 
datasets,  as  well  as  their  familiarity  with  the  City  of  San  Francisco's  Basemap  data. 

For  any  new  agreement  or  re-licensing  of  the  Basemap  GIS  data,  DPW  will  aggressively 
seek  the  best  terms  possible  through  competitive  negotiations  with  qualified  data 
marketing  firms. 


17 


Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 

Item  3 -File  01-0252 


Department: 
Item: 

Amount: 
Source  of  Funds: 
Description: 


Public  Utilities  Commission  (PUC) 
Water  Department 

Hearing  to  consider  the  release  of  reserved  funds  for  the 
Water  Department  in  the  amount  of  $474,765  to  fund 
overtime  expenditures. 

$474,765 

Water  Department's  FY  2000-2001  Budget 

The  Water  Department's  FY  2000-2001  budget  includes 
budgeted  overtime  expenditures  of  $1,424,297.  During  the 
FY  2000-01  budget  hearings,  the  Finance  and  Labor 
Committee  recommended  that  one  third  of  annual 
Overtime  expenditure  budgets  for  several  City 
departments  be  placed  on  reserve  so  that  the  Committee 
can  monitor  spending  for  Overtime  during  the  fiscal  year. 
Therefore,  the  Finance  and  Labor  Committee  placed  a 
total  of  $474,765  of  this  amount  on  reserve  for  the  Water 
Department,  leaving  $949,532  available  for  expenditure. 

The  table  below  provides  a  summary  of  Overtime 
spending  to  date  and  projected  overtime  spending  for  FY 
2000-2001,  as  well  as  spending  to  date  and  projections  for 
all  Water  Department  Salary  and  Fringe  Benefit 
accounts,  including  Overtime,  based  on  the  Controller's 
payroll  records. 


Controller's  Projection  -Water  Department  Expenditures  for  Overtime  and  Total 
Salaries  and  Fringe  Benefits  Including  Overtime  through  February  2,  2001 


FY  2000-2001 
Budget 


Actual 
Expenditures 
Through  Pay 
Period  Ending 

2/2/01 


Projected 
Expenditures       Projected  Surplus 
Through  July  30,  (Deficit) 

2001  * 


Overtime 

All  Salaries  and  Fringe 
Benefits  Including 
Overtime 


$1,424,297 
35,540,372 


$1,104,831 
20,985,905 


$2,039,406 
35,556,203 


($615,109) 
($15,831) 


Projections  based  on  spending  at  the  level  of  the  pay  period  ending 
2/2/01  for  the  remainder  of  the  Fiscal  Year. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 


As  summarized  in  the  table  above,  the  Controller's  latest 
projection  report  for  salary  and  fringe  benefit  expenditures 
(including  Overtime)  shows  that: 

•  As  of  the  pay  period  ending  February  2,  2001,  the  Water 
Department  has  incurred  Overtime  expenditures  of 
$1,104,831. 

•  Through  February  2,  2001  (or  15.5  of  26.0  pay  periods  in 
FY  2000-01)  the  Water  Department  has  already 
expended  77.6  percent  of  its  total  Overtime 
appropriation  of  $1,424,297  and  116.4  percent  of  its 
available,  unreserved  overtime  funding  of  $949,532. 

•  Based  on  overtime  expenditures  incurred  during  the  pay 
period  ending  February  2,  2001,  the  Controller's 
projection  indicates  that  the  Water  Department  will 
spend  a  total  of  $2,039,406  on  overtime,  which  is 
$615,109,  or  43.2  percent,  more  than  the  Department's 
total  FY  2000-01  Overtime  appropriation  of  $1,424,297. 

•  For  all  Salaries  and  Fringe  Benefit  Expenditures, 
including  overtime,  the  Controller's  projection  indicates 
that  the  Water  Department  will  incur  total  expenditures 
of  $35,556,203  in  FY  2000-2001,  which  is  $15,831,  or 
0.04  percent,  more  than  the  FY  2000-2001  budget 
amount  of  $35,540,372. 

Based  on  the  data  summarized  above,  the  Water 
Department  is  currently  projected  to  end  Fiscal  Year  2000- 
2001  with  a  deficit  of  approximately  $615,109  in  Overtime 
expenditures.  However,  Mr.  Carlos  Jacobo  of  the  PUC 
advises  that  the  Water  Department  does  not  anticipate 
requesting  a  supplemental  appropriation  for  Overtime 
expenditures  in  FY  2000-2001  for  the  following  reasons: 

•  Mr.  Jacobo  reports  that  the  Water  Department  is 
currently  conducting  an  internal  audit  of  its  Overtime 
practices  and  has  detected  a  variety  of  accounting  errors 
in  the  department's  recording  of  Overtime  and  that 
some  charges  for  Overtime  worked  on  capital  projects 
were  mistakenly  applied  to  the  Water  Department's 
operating  budget  instead  of  the  specific  capital 
improvement  projects.  According  to  Mr.  Jacobo,  as  part 
of  the   audit  the  Water  Department  is  reviewing  all 

BOARD  OF  SUPERVISORS 

BUDGET  ANALYST 

19 


Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 

Overtime  expenditures  for  Fiscal  Year  2000-2001,  and 
upon  completion,  the  department  will  reverse  incorrect 
Overtime  charges  in  order  to  revise  its  Overtime 
expenditures  applied  to  the  operating  budget.  As  of  the 
writing  of  this  report,  Mr.  Jacobo  estimates  that  such 
revisions  will  result  in  a  reduction  of  current  Overtime 
expenditures  as  of  February  2,  2001  of  $1,104,831  by 
approximately  10  percent  to  20  percent  or  between 
$110,483  and  $220,966. 

•  In  addition,  Mr.  Jacobo  advises  that  the  Water 
Department  is  putting  into  place  new  procedures  and 
controls  to  monitor  and  restrict  the  use  of  overtime. 
According  to  Mr.  Jacobo,  such  procedures  and 
restrictions  will  allow  the  department  to  reduce 
Overtime  expenditures  for  the  remainder  of  Fiscal  Year 
2000-2001.  As  a  result,  the  Water  Department  expects 
to  end  Fiscal  Year  2000-2001  without  a  deficit  in 
overtime  expenditures. 

•  Further,  Mr.  Jacobo  advises  that  Overtime  expenditures 
for  the  first  seven  months  of  Fiscal  Year  2000-2001  (July 
through  January)  have  been  higher  than  anticipated 
due  to  an  unusually  high  number  of  emergency  repairs 
to  ruptured  water  pipelines.  Mr.  Jacobo  anticipates  that 
the  number  of  such  repairs  should  decline  over  the 
remainder  of  Fiscal  Year  2000-2001. 

•  According  to  Mr.  Jacobo,  should  the  Water  Department 
end  Fiscal  Year  2001-2002  with  a  deficit  in  Overtime 
spending,  the  Water  Department  would  fund  such  an 
Overtime  deficit  with  surplus  funds  from  other  accounts 
in  the  department.  Therefore,  Mr.  Jacobo  anticipates 
that  the  Water  Department  will  not  be  required  to 
request  a  supplemental  appropriation  for  Salaries  and 
Fringe  Benefits  including  Overtime. 

Recommendation:        Approve   the   requested  release   of  $474,765  in  reserved 
Overtime  funds. 


BOARD  OF  SUPERVISORS 

BUDGET  ANALYST 

20 


Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 

Item  4  -  File  01-0208 


Department: 
Item: 

Amount: 
Source  of  Funds: 


Description: 


Public  Utilities  Commission  (PUC) 

Hetch  Hetchy  Water  and  Power  (Hetcb  Hetchy) 

Ordinance  appropriating  $25,400,000  of  Hetch  Hetchy 
Operating  Fund  monies  to  fund  the  purchase  of  electrical 
power  for  resale  to  meet  municipal  and  contractual 
obligations  for  Fiscal  Year  2000-2001. 

$25,400,000 

Hetch  Hetchy  operating  funds  have  been  identified  for  the 
proposed  supplemental  appropriation  from  the  following 
specific  sources: 


Source 

Amount 

Revenue  from  Sale  of  Electricity 

$10,800,000 

De-obligated  Capital  Projects 

7,400,000 

Unappropriated  Fund  Balance 

6,200,000 

Permanent  Salary  Savings 

1,000,000 

Total 

=;  $25;4oo,oqo 

See  Comment  No.  2  below  for  further  discussion  of 
funding  sources. 

As  a  byproduct  of  delivering  water  to  the  City's  Water 
Department  for  sale  to  the  City's  retail  customers  in  San 
Francisco  and  wholesale  water  customers  in  the  Bay 
Area,  Hetch  Hetchy  Water  and  Power  also  generates 
hyrdroelectric  power  for  the  City's  municipal  purposes 
and  for  sale  to  customers  who  purchase  hydroelectric 
power  under  contracts  with  the  City. 

The  proposed  supplemental  appropriation  would  provide 
a  total  of  $25,400,000  to  Hetch  Hetchy  to  fund  the 
purchase  of  electrical  power  for  resale.1  Hetch  Hetchy  has 
historically  purchased  wholesale  power  on  the  spot 
market  for  electricity  to  supplement  its  own  generation  of 
hydroelectric  power  to  meet  municipal  and  contractual 


1  Ms.  Park  advises  that  "power  for  resale"  includes  power  Hetch  Hetchy  purchases  to  supply 
electricity  to  all  of  Hetch  Hetchy's  customers,  including  City  departments  and  tenants  on  City-owned 
land,  as  well  as  to  other  retail  and  wholesale  customers.  Such  customers  include  the  Modesto  and 
Turlock  Irrigation  Districts. 

BOARD  OF  SUPERVISORS 

BUDGET  ANALYST 

21 


Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 

obligations.  A  shortage  this  year  in  both  natural  gas  and 
electricity  supplies,  combined  with  California's 
deregulation  of  the  power  industry,  have  led  to  steep 
increases  in  the  cost  of  purchasing  such  electric  power. 
Ms.  Laurie  Park,  Acting  General  Manager  of  Hetch 
Hetchy,  reports  that  while  in  the  past,  prices  in  the  spot 
market  have  ranged  from  $20  to  $40  per  Megawatt  hour2, 
the  current  price  for  power  on  the  spot  market  is 
fluctuating  at  around  $200  to  $300  per  Megawatt  hour. 

For  FY  2000-2001,  Hetch  Hetchy  budgeted  a  total  of 
$17,600,000  for  the  purchase  of  power  for  resale. 
According  to  Ms.  Park,  as  of  February  19,  2001,  Hetch 
Hetchy  had  expended  a  total  of  $36,010,488,  which  is 
$18,410,488,  or  104.6  percent,  more  that  the  amount  of 
$17,600,000  budgeted  for  the  entire  fiscal  year.  Based  on 
projections  provided  by  Ms.  Park,  Hetch  Hetchy  will 
expend  an  estimated  total  of  $41,218,088  to  purchase 
power  for  resale  FY  2000-2001,  which  will  be  $23,618,088, 
or  134.2  percent,  more  than  the  original  budgeted  amount 
of  $17,600,000,  as  shown  in  Attachment  I,  provided  by 
Hetch  Hetchy.  However,  as  explained  in  Comment  No.  5, 
Hetch  Hetchy  is  requesting  $25,400,000,  or  $1,781,912 
more  than  the  projected  year-end  deficit  of  $23,618,088. 

Comments:  1.  The  FY  2000-2001  budget,  as  adopted  by  the  Board  of 

Supervisors,  is  based  on  total  General  Fund  revenue 
sources  that  include  a  transfer  of  Hetch  Hetchy  surplus 
revenues  to  the  General  Fund  in  the  amount  of 
$29,850,000.  Mr.  Carlos  Jacobo,  Budget  Director  of  the 
PUC,  does  not  anticipate  that  the  proposed  supplemental 
appropriation  will  cause  a  reduction  in  Hetch  Hetchy's  FY 
2000-2001  transfer  to  the  General  Fund,  as  previously 
approved  by  the  Board  of  Supervisors.  According  to  Mr. 
Jacobo,  Hetch  Hetchy  currently  has  an  unappropiated 
fund  balance  totaling  approximately  $11,000,000,  which 
would  be  reduced  by  $6,200,000  to  approximately 
$4,800,000  if  the  proposed  supplemental  appropriation 
were  to  be  approved. 


2  A  Megawatt  hour  is  equivalent  to  1,000  kilowatt  hours,  or  enough  power  to  provide  electricity  to 
one  thousand  average  homes  for  a  period  of  one  hour,  according  to  Ms.  Park. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

99 


Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 


2.  As  shown  in  the  table  above,  Hetch  Hetchy  will  use  the 
following  four  sources  to  fund  the  proposed  $25,400,000 
supplemental  appropriation: 

(a)  Revenue  from  Electricity  Sales  (810,800.000):  Ms. 
Park  advises  that  Hetch  Hetchy  generated  this 
$10,800,000  in  revenues  by  selling  electricity  beyond 
the  $81,180,000  that  Hetch  Hetchy  had  anticipated 
and  budgeted  for  FY  2000-2001,  as  shown  in 
Attachment  II.  Hetch  Hetchy  projects  year-end 
revenues  of  $95,278,686  from  the  sale  of  electricity, 
which  is  $14,098,686  more  than  the  $81,180,000  in 
revenues  budgeted  for  FY  2000-2001.  Ms.  Park 
advises  that  Hetch  Hetchy  is  requesting  that  only 
$10,800,000  of  the  $14,098,686  in  projected  surplus 
to  be  used  to  fund  the  subject  request  since  the  year- 
end  revenue  projections  may  change  depending  on 

_nn_ra-tes— to^be^el^-by^the^^alifQr-m^ 


Commission. 

(b)  De-obligated  Capital  Projects  ($7.400.000): 
According  to  Ms.  Park,  Hetch  Hetchy  reviewed  all  of 
its  capital  projects  and  determined  that  the  proposed 
New  Moccasin  Penstock  Project,  originally  planned 
to  begin  in  the  Spring  of  2001,  could  be  deferred  for 
one  to  two  years  without  risk  to  public  health  or 
safety,  as  stated  in  Attachment  III.  According  to  Ms. 
Park,  the  new  Moccasin  Penstock  Project  would 
expand  the  system  of  pipes,  increasing  the  Moccasin 
Powerhouse's  ability  to  generate  electricity  and 
allowing  Hetch  Hetchy  to  repair  existing  pipelines. 
Ms.  Park  reports  that  the  entire  $7,400,000  balance 
in  the  New  Moccasin  Penstock  Project  would  be  used 
to  help  fund  the  proposed  supplemental 
appropriation.  According  to  Ms.  Park,  Hetch  Hetchy 
has  completed  the  design  phase  of  the  project  and 
will  postpone  putting  the  construction  contract  out 
to  bid  until  Fiscal  Year  2002-2003.  Ms.  Park  advises 
that  Hetch  Hetchy  will  fund  construction  of  the 
project  with  a  future  appropriation,  subject  to 
approval  by  the  Board  of  Supervisors.  Ms.  Park 
estimates  that  the  New  Moccasin  Penstock  Project 
will  now  be  rebudgeted  in  Fiscal  Year  2002-2003  and 
completed  in  Fiscal  Year  2003-2004. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 


(c)  Unappropiated  Fund  Balance  ($6.200.000'):  As  stated 
in  Comment  No.  1  above,  the  proposed  supplemental 
appropriation  would  reduce  Hetch  Hetchy's 
unappropriated  fund  balance  by  $6,200,000,  from 
$11,000,000  to  $4,800,000. 

(d)  Savings  in  Permanent  Salaries  ($1.000,000): 
According  to  Ms.  Park,  Hetch  Hetchy  has  realized 
approximately  $1,000,000  in  salary  savings  due  to 
approximately  30  vacancies  during  FY  2000-2001. 
Ms.  Park  advises  that  many  of  these  vacancies  result 
from  Hetch  Hetchy's  recent  reorganization  and,  now 
that  the  Department  of  Human  Resources  has 
approved  a  civil  service  reclassification  study  also 
related  to  the  reorganization  in  the  department, 
Hetch  Hetchy  plans  to  fill  12  of  such  vacancies 
within  four  to  six  weeks,  as  stated  in  Attachment  III. 


3.  As  explained  in  Attachment  III,  provided  by  Hetch 
Hetchy,  power  prices  are  expected  to  remain  at  very  high 
levels  through  February  of  2001,  declining  in  March 
through  May  (as  snow  packs  melt  and  allow  greater 
production  of  hydroelectric  power)  and  increasing  to  high 
levels  again  during  June  through  October  of  2001.  Since 
July  1,  2000,  the  beginning  of  FY  2000-2001,  the  average 
monthly  price  per  Megawatt  hour  for  power  has  been 
$164.04,  according  to  Ms.  Park  and  as  shown  in 
Attachment  rV,  provided  by  Hetch  Hetchy.  According  to 
Ms.  Park,  Hetch  Hetchy  projects  the  average  price  per 
Megawatt  hour  for  the  remaining  four  months  of  the  fiscal 
year  (March  through  June)  to  range  from  an  estimated 
$150  to  $250  per  Megawatt  hour. 

4.  The  City  is  currently  under  long-term  agreements  with 
the  Modesto  and  Turlock  Irrigation  Districts  ("the 
Districts")  for  the  sale  of  Hetch  Hetchy  hydroelectric 
power.  These  Long-Term  Power  Sales  Agreements  began 
on  April  1,  1988  and  will  expire  on  June  30,  2015,  for  a 
term  of  27  years  and  three  months  each.  Under  these 
Long-Term  Power  Sales  Agreements,  the  City  has  a  firm 
obligation  to  sell  to  the  Districts  sufficient  energy  to  meet 
the  Districts'  demand  for  "Class  1"  and  "Class  3"  power, 
determined  by  a  formula  defined  in  the  agreement  and 
explained  in  Attachment  III  to  this  report,  provided  by 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 


Hetch  Hetchy.  Under  these  Long-Term  Power  Sales 
Agreements,  the  amount  of  power  that  the  City  must 
provide  to  the  Districts  is  based  on  a  5-year  irrevocable 
forecast,  so  that  in  the  year  2001,  the  City  projects  the 
amount  of  power  it  will  be  required  to  provide  to  the 
Districts  in  2005.  Further,  under  these  Long-Term  Power 
Sales  Agreements,  the  Modesto  and  Turlock  Irrigation 
Districts  have  the  right  of  first  refusal  for  purchasing 
Hetch  Hetchy's  Excess  Energy  from  hydroelectric 
generation  (defined  in  table  below).  Under  the  Power 
Sales  Agreement,  the  City  must  charge  the  Districts  the 
following  rates: 


Types  of  Power  Sold  to  Modesto  and  Turlock 
Irrigation  Districts  by  Hetch  Hetchy. 

Current  Average 

Rate  per 

Megawatt  Hour 

Charged  to 

Districts 
in  FY  2000-01 

Class  1  Power: 

Mainly  used  for  actual  municipal  public  purposes  and 
irrigation  pumping  for  agriculture 

$15.87 

Class  3  Power: 

Remainder  of  "firm"  energy  sold  under  the  Agreements 

$34.10 

Excess  Energv 

Excess  Energy  is  energy  that  Hetch  Hetchy  generates 
due  to  the  need  to  move  water  from  reservoirs  but  does 
not  need  for  its  own  use.  Under  the  Long-Term  Power 
Sales  Agreements,  the  Modesto  and  Turlock  Irrigation 
Districts  have  the  first  right  of  refusal  for  purchasing 
such  Excess  Energy  from  hydroelectric  generation, 
according  to  Ms.  Park 

$22.44 

In  order  for  the  City  to  meet  the  demand  for  power  in  both 
the  City  and  in  the  Modesto  and  Turlock  Irrigation 
Districts,  Hetch  Hetchy  is  required  to  purchase  power, 
especially  during  summer  and  fall  when  Hetch  Hetchy's 
generation  of  hydroelectric  power  is  limited  by  the 
amount  of  water  delivered  to  the  City  and  the  Bay  Area. 
The  Budget  Analyst  notes  that  while  Hetch  Hetchy  has 

BOARD  OF  SUPERVISORS 

BUDGET  ANALYST 

25 


Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 


paid  an  average  of  $164.04  per  Megawatt  hour  per  month 
since  July  1,  2001  to  purchase  power,  the  department  has 
been  required  by  the  Power  Sales  Agreements  to  continue 
selling  power  to  the  Modesto  and  Turlock  Irrigation 
Districts  at  a  loss. 

As  shown  in  the  table  above,  whenever  Hetch  Hetchy 
must  purchase  power  at  a  current  cost  of  $200  to  $300  per 
Megawatt  hour,  this  results  in  a  loss  to  Hetch  Hetchy 
ranging  between  approximately  $184.13  and  $284.13  per 
Megawatt  hour  when  such  power  is  sold  to  the  Modesto 
and  Turlock  Irrigation  Districts  for  Class  1  power  and 
between  approximately  $165.90  and  $265.90  per 
Megawatt  hour  when  sold  to  the  Districts  for  Class  3 
power. 

According  to  Ms.  Park,  from  the  period  between  July  1, 
2000  and  December  31,  2000,  Hetch  Hetchy  sold  a  total  of 
471,420  Megawatt  hours  of  electricity  to  the  Modesto  and 
Turlock  Irrigation  Districts,  which  includes:  (a)  169,272 
Megawatt  hours  of  Class  1  Power,  (b)  280,268  Megawatt 
hours  of  Class  3  Power,  and  (c)  21,880  Megawatt  hours  in 
Excess  Energy.  Ms.  Park  advises  that  Hetch  Hetchy 
received  total  revenues  of  $12,570,829  from  the  Modesto 
and  Turlock  Irrigation  Districts  for  such  power  sales. 

Based  on  data  provided  by  Hetch  Hetchy,  the  Budget 
Analyst  estimates  that,  for  the  six  months  from  July  1, 
2000  through  December  31,  2000,  Hetch  Hetchy 
purchased  a  total  of  143,836  Megawatt  hours  for  resale  to 
the  Modesto  and  Turlock  Irrigation  Districts  at  a  total 
cost  of  $21,576,318  and  an  average  cost  of  $150  per 
Megawatt  hour.  As  a  result,  as  of  December  31,  2000, 
Hetch  Hetchy  has  lost  an  estimated  total  of  $17,711,197 
resulting  from  its  obligation  to  sell  hydroelectric  power  to 
the  Modesto  and  Turlock  Irrigation  Districts.  This 
estimated  loss  of  $17,711,197  is  the  difference  between 
the  total  cost  of  $21,576,318  to  purchase  power  less 
approximately  $3,865,120  paid  to  Hetch  Hetchy  by  the 
Modesto  and  Turlock  Irrigation  Districts  for  such  power. 

5.  As  stated  previously,  Hetch  Hetchy  projects  that  it  will 
expend  an  estimated  total  of  $41,218,088  to  purchase 
power    for    resale    in    FY    2000-2001,    which    will    be 

BOARD  OF  SUPERVISORS 
BUDGET,  ANALYST 

26 


Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 

$23,618,088,  or  134.2  percent,  more  than  the  original 
budgeted  amount  of  $17,600,000,  as  shown  in  Attachment 

1.  provided  by  Hetch  Hetchy.  However,  the  proposed 
supplemental  appropriation  is  for  $25,400,000,  or 
$1,781,912  more  than  the  projected  deficit  of  $23,618,088. 
Ms.  Park  advises  that  this  difference  of  $1,781,912  will 
allow  Hetch  Hetchy  to  adjust  to  probable  changes  in  the 
projected  year-end  deficit  of  $23,618,088,  due  to  the 
volatility  of  electricity  prices.  Any  unexpended  portion  of 
the  proposed  supplemental  appropriation  will  return  to 
Hetch  Hetchy's  Unappropriated  Fund  Balance  at  the  end 
of  FY  2000-2001. 

Recommendations:         1.     Amend     the     proposed     $25,400,000     supplemental 

appropriation  by  reserving  $1,781,912,  pending  an 
updated  projection  of  Hetch  Hetchy's  total  deficit  for  the 

purchase   of  electrical  power  for  resale  in  Fiscal  Year 

2000-2001.T:  -  -  :  -  - 

2.  Request  that  Hetch  Hetchy  provide  a  report  to  the 
Finance  Committee  on  the  status  of  Hetch  Hetchy's 
projected  deficit  for  the  purchase  of  electrical  power  for 
resale  by  May  1,  2001. 

3.  Approve  the  proposed  ordinance,  as  amended. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

97 


Attachment   I 


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29 


«rPO 


HETCH   HETCHY 

Water  a  Power 


WlLUE  L_  BROWN,  JR. 

Mayor 

president 
Victor  G.  Makras 
Vice  President 
Ann  mou-er  Caen 
E.  Dennis  Normandy 
Frank  l_  Cook 
Ashok  Kumar  Bhatt 

John  p.  Mullane,  Jr. 

General  manager 


Attachment  III 
Page  1  of  7 


TO: 


MEMORANDUM 

Board  of  Supervisors  Budget  Analyst 
Attention:   Emilie  Neumann 


FROM:  Hetch  Hetchy  Water  &  Power  -  Laurie  Park 

SUBJECT:     FYOO/01  Supplemental  Appropriation  for  $25.4  Million 


DATE: 


February  19,  2001 


The  purpose  of  this  memo  is  to  respond  to  questions  raised  by  the  Board  of 
Supervisors  Budget  Analyst  about  Hetch  Hetchy 's  request  for  a  supplemental 
appropriation  in  the  amount  of  $25.4  million. 

For  clarification,  Hetch  Hetchy  requested  and  the  SFPUC  approved  a  request  for  an 
$18  million  supplemental  at  its  meeting  on  January  9,  2001.   Subsequent  to  that 
date,  continued  dry  hydrological  conditions  reduced  Hetch  Hetchy's  ability  to 
generate.  In  addition,  very  cool  temperatures  and  persistent  gas  and  electric  supply 
shortages  kept  power  prices  higher  than  anticipated.  As  a  result,  Hetch  Hetchy  will 
exceed  the  originally  requested  $18  million  supplemental  appropriation.  We  believe 
that  increasing  the  amount  by  an  additional  $7.4  million,  to  a  total  of  $25.4  million, 
is  reasonable  at  this  time.   However,  if  hydrological  conditions  do  not  rebound  to 
close  to  "normal"  levels,  we  may  need  to  seek  a  further  supplemental  appropriation 
for  the  remainder  of  this  fiscal  year. 

"Power  for  Resale"  Expenditures 

Object  033  "Power  for  Resale"  was  budgeted  at  $35,271,210  during  FYOO/01. 
This  amount  was  comprised  of  two  principal  components:   $21,631,210  for  "03311 
Power  for  Resale"  and  $13,640,000  for  "03321  Power  Transmission  & 
Distribution" . 

Subobject  "03311  Power  for  Resale"  is  comprised  of  wholesale  power  purchases 
(budgeted  at  $17.6  million)  and  wholesale  power  support  costs  under  the  long  term 
City/PG&E  Interconnection  Agreement  (budgeted  at  $4  million).   Subobject  "03321 
Power  Transmission  &  Distribution"  is  comprised  of  charges  by  PG&E  and  others 
for  transport  of  power. 


:, ;\^  ;,.:•. -rrxrr:: 


30 


Attachment  m 
Page  2  of 7 

The  spreadsheet  provided  as  Attachment  1  to  the  Budget  Analyst  report  indicates  the 
breakdown  of  budgeted  vs.  actual  costs  by  subobject  and  principal  category  of  expense. 
As  of  February  19' ,  Hetch  Hetchy  has  overspent  its  Power  for  Resale  budget  by 
$18,361,988.  As  of  this  date,  wholesale  power  expenditures  (including  transport,  aka 
"transmission  and  distribution")  are  projected  at  556,687,586  through  June  30,  2001. 
This  is  not  the  highest  amount  ever  paid  for  wholesale  power  and  transport  services.  In 
fiscal  year  1986,  the  cost  of  these  services  totaled  S58.5  million. 

Over  the  past  10  years,  Hetch  Hetchy's  "Power  for  Resale"  budget  varied  from  a  low  of 
$17.7  million  to  a  high  of  $39.5  million.  Most  of  these  variances  were  attributable  to 
fluctuations  in  annual  hydrology.  The  517.7  million  budget  occurred  in  a  very  wet  year 
(170%  of  "average")  and  the  $39.5  million  cost  occurred  during  a  drought  (45%  of 
"average"). 

This  year,  the  very  high  cost  of  "Power  for  Resale"  is  directly  attributable  to  the 
California  power  crisis  and  continued  shortages  of  both  natural  gas  and  electricity. 
Attachment  IV  to  the  Budget  Analyst  report  illustrates  that  over  the  past  7  years,  Hetch 
Hetchy's  annual  power  purchase  costs  ranged  from  a  low  of  $3.7  million  to  a  high  of 
$15.8  million,  with  average  prices  ranging  from  $17.56  to  $35.14  per  megawatt  hour. 
This  year's  power  purchases  have  already  exceeded  $36  million  at  an  average  cost  of 
$164.04/MWhr.  Futures  prices  for  March  and  April  are  fluctuating  in  the  5220-5250 
range. 

Districts'  Contracts 

The  "Long  Term  Power  Sales  Agreement  between  the  City  and  County  of  San  Francisco 
and  the  [Modesto/Turlock]  Irrigation  District(s)"  were  executed  in  1988  and  expire  on 
July  1,  2015,  "unless  it  is  terminated  earlier  by  the  agreement  of  the  Parties  or  by  either 
Party  pursuant  to  this  Section  24  or  Section  25." 

These  agreements  require  that  Hetch  Hetchy  provide,  and  the  Districts  take,  electricity 
generated  by  the  Hetch  Hetchy  Project  between  the  "Project  Dependable  Capacity" 
("PDC";  presently  260  MW)  as  defined  in  these  agreements  and  the  amount  of  power 
needed  by  Hetch  Hetchy  to  meet  "City  Municipal  Demand".  The  Districts  must  take  that 
power  at  a  65%  load  factor  (i.e.,  Districts'  Energy  =  Demand  x  Hours  per  Year  x  65%). 

The  amount  of  power  that  Hetch  Hetchy  must  provide  to  the  Districts  is  based  on  a  5  year 
irrevocable  forecast.  In  other  words,  the  City  projects  in  the  year  2001  the  amount  of 
City  Municipal  Demand  expected  in  the  year  2005.  This  projection  is  binding  in  terms  of 
how  much  power  the  City  must  provide  and  the  Districts  must  take  in  the  year  2005.  The 
amount  of  power  that  the  City  must  provide  and  the  Districts  must  take  from  the  years 
2001  through  2004  have  already  been  determined  in  prior  years  through  the  same  5Ih  year 
forecast  methodology.  The  amount  of  City  Municipal  Demand  forecasted  for  calendar 
year  2001  is  128,045  kW.  Therefore,  the  amount  of  energy  that  the  City  must  provide  to 
the  Districts  is  751  million  kilowatt  hours  [(260,000  kW-  128,045  kW)  x  8760  hours  per 
year  x  65%]. 


31 


Attachment  HI 
Page  3  of 7 


There  are  three  classes  of  sales  under  these  Agreements: 


(1)  Sec.  4.15  Class  1  Power:  That  Power  which,  pursuant  to  Section  9(1)  of  the  Raker 
Act,  is  sold  at  cost  by  City  to  [Modesto/Turlock]. 

(2)  Sec.  4.16  Class  3  Power:  That  portion  of  Districts'  Power  purchased  by 
[Modesto/Turlock]  from  City  that  is  not  Class  1  Power. 

(3)  Sec.  4.22  Districts'  Excess  Energy:  The  amount  of  Hetch  Hetchy  Excess  Energy,  in 
kilowatthours,  available  for  use  by  Districts,  up  to  ninety-eight  (98)  percent  of  the 
greater  of  (1)  the  difference  between  Hetch  Hetchy  Excess  Energy  and  Airport 
Tenants'  energy  requirements  or  (ii)  one-half  of  Hetch  Hetchy  Excess  Energy,  as 
more  fully  described  in  Section  7.4. 

Class  1  and  Class  3  power  are  considered  "firm";  i.e.,  the  City  has  an  obligation  to 
provide  that  amount  of  power  under  most  circumstances.  Exceptions  are  defined  in  Sec. 
21  "Uncontrollable  Forces".  Excess  energy  is  considered  "non-firm";  i.e.,  the  City  is 
only  obligated  to  offer  this  energy  to  the  Districts  if  and  when  there  is  sufficient  water  to 
generate  and  Hetch  Hetchy  generation  exceeds  PDC. 

The  amount  of  power  that  the  Districts  take  for  Class  1  vs.  Class  3  are  based  upon  actual 
Class  1  usage.  "Class  1"  power  may  only  be  used  by  the  Districts  for  certain  purposes 
defined  in  the  1913  Raker  Act,  i.e.,  agricultural  pumping  and  "actual  municipal  public 
purposes"  [HR7207  Sec.  9(1)].  Any  power  taken  by  the  Districts  under  the  PDC  is 
allocated  first  to  qualified  Class  1  uses.  The  balance  of  "firm"  energy  that  the  Districts 
must  take  is  considered  "Class  3". 

The  rates  at  which  Hetch  Hetchy  must  sell  power  to  the  Districts  is  determined  by  the 
Agreements.  In  accordance  with  the  Raker  Act,  "Class  1"  power  must  be  sold  "at  cost". 
Class  3  rates  are  based  upon  a  rate  methodology  described  in  the  Agreement.  The  rate 
methodology  is  tied  to  PG&E's  "Electric  System  Average  Energy  Costs"  as  reported 
annually  in  their  SEC  Form  10-K  reports. 

The  current  rates  are  as  follows: 


Rate  basis 

Class  1 

Class  3 

Excess  Energy 

Demand 

S/kW-month 

S4.74 

$5.53 

Energy 

$/kilowatt  hour 

$0.00588 

$0.02244 

S0.02244 

Blended (avg) 

S/kilowatt  hour 

$0.01587 

$0.03410 

$0.02244 

Assuming  an  annual  distribution  of  45%  Class  1  and  55%  Class  3  under  PDC,  the 
average  rate  earned  on  firm  sales  to  the  Districts  is  approximately  $0,026  per  kilowatt 
hour  ($26  per  megawatt  hour). 


32 


Attachment  HE 
Page  4  of 7 


Total  Revenues  from  Sales  of  Power 


In  the  FY00/01  budget,  we  estimated  power  sales  of  $81,180,000.  Attachment  II  of  the 
Budget  Analyst  report  illustrates  the  breakdown  of  budgeted  vs.  actual  to-date  and 
projected  fiscal  year  sales  by  customer  segment. 

The  principal  unknown  at  this  time  is  the  amount  of  energy  that  will  be  available  for  sale 
during  the  spring  snowmelt  as  excess  energy.  Spring  excess  energy  must  be  offered  first 
to  the  Districts,  and  then  to  other  municipal  utilities  and  public  power  agencies.  In  the 
event  that  Hetch  Hetchy  cannot  find  sufficient  qualified  wholesale  buyers  for  its  excess 
energy  during  the  spring  snowmelt,  PG&E  "banks"  the  power  for  us  and  allows  us  to 
return  it  to  ourselves  during  "like  time  periods"  (i.e.,  if  we  deposit  the  power  during  off- 
peak  periods,  we  take  it  back  during  off-peak  periods;  etc.). 

To-date,  we  have  had  $8.5  million  in  unbudgeted  sales,  as  follows: 

ISO  Demand  Reduction  Program                               $  2,000,000m 
Wholesale  Sales  (Summer  2000)                                $  4,500,000[2] 
—      —Emergency  Sales  to  ISO  $  2.000.000[31"r ~ — 


Total  Unbudgeted  Sales:  $  8.500.000 

Notes: 

[1]  Hetch  Hetchy  coordinated  the  City's  participation  in  the  ISO's  Demand  Reduction  Program 
during  Summer  2000.  Hetch  Hetchy 's  share  of  the  revenues  earned  under  this  program  was 
S2  million. 

[2]  In  addition,  Hetch  Hetchy  sold  S4.5  million  of  power  during  summer  to  municipal  utilities 
and  other  public  agencies,  including  the  Districts.  Excess  power  was  available  during  this 
period  because  Hetch  Hetchy  needed  to  reduce  the  reservoir  elevation  at  Cherry  (Lake  Lloyd) 
in  order  to  drain  the  Cherry-Eleanor  tunnel  for  maintenance  and  repair  work  scheduled  during 
Fall  2000. 

[3]  Further,  the  ISO  has  called  upon  Hetch  Hetchy  throughout  the  past  year  for  emergency  power 
support  needed  to  keep  power  flowing  on  the  California  electric  grid.  To-date,  sales  of  such 
emergency  power  to  the  ISO  were  $2  million.  We  have  provided  some  small  quantities  of 
emergency  power  to  the  ISO  since  January  1,  2001;  however  we  do  not  yet  know  how  much 
the  ISO  will  be  paying  for  that  power  so  it  is  not  included  in  these  projections. 

Attachment  II  of  the  Budget  Analyst  report  projects  a  total  of  $14  million  in  unbudgeted 
revenues  during  FY00/01.  Of  this  amount,  $8.5  million  has  already  been  earned  and  $2.3 
million  is  projected  to  be  earned  as  a  result  of  the  temporary  (3  month)  $0.01/kWhr 
surcharge  authorized  by  the  CPUC  to  be  charged  to  PG&E  customers  effective  January  1, 
2001.'  The  remaining  $3.2  million  is  attributable  to  a  combination  of  increased  loads  and 
a  presumption  that  the  PG&E  surcharge  will  remain  in  effect  through  June  30,  2001 . 


1  Under  existing  PUC  rate  policy  which  was  ratified  by  the  Board  of  Supervisors,  certain  classes  of 
Hetch  Hetchy  customers  are  charged  rates  equivalent  to  PG&E  retail.    Specifically,  Enterprise  Fund 


33 


Attachment  III 
Page  5  of  7 

For  purposes  of  this  supplemental,  we  have  assumed  incremental  revenues  of  $10.8 
million  ($8.5  million  already  earned,  plus  $2.3  million  from  rate  increases)  will  be 
available.  To  the  extent  that  actual  revenues  may  exceed  this  amount,  the  amount  of 
funds  appropriated  from  Hetch  Hetchy's  Fund  Balance  will  be  reduced  accordingly. 

Wholesale  Power  Market  Outlook 

Based  on  recent  power  price  forecasts  issued  by  PIRA  Energy  Group,  present 
expectations  are  that  power  prices  will  remain  at  very  high  levels  through  February,  but 
are  expected  to  decline  in  March  through  May  (spring  snowmelt).  Thereafter,  presuming 
we  see  a  warm  summer  similar  to  Summer  2000,  prices  are  expected  to  reach  or  exceed 
levels  experienced  during  June  through  October  2000.  PIRA  believes  that  continued 
shortages  of  natural  gas  supplies  will  keep  prices  higher  than  "normal"  (although  not  at 
the  extraordinarily  high  levels  experienced  this  winter)  until  gas  production  catches  up 
with  demand.  PIRA  experts  believe  that  may  occur  within  12-18  months. 

Presently,  we  are  struggling  to  prepare  an  estimate  of  power  purchase  costs  for  FY01/02. 
^VTe  believe  that  costs"  maynmgeTrbm  $40 1  o  $80  million.  The  actual  level  of 
expenditures  experienced  will  depend  upon  a  number  of  factors,  the  most  significant  of 
which  are: 

•  Hydrology.  As  a  100%  hydroelectric  utility,  Hetch  Hetchy's  power  purchase 
budget  is  significantly  impacted  by  variations  in  hydrology.  This  year,  for 
example,  we  are  experiencing  dry  conditions.  To-date,  we  have  received  about 
75%  of  the  precipitation  normally  received  by  this  time.  This  year's  final  power 
purchase  expenditures  will  depend  in  large  part  upon  whether  or  not  we  approach 
"normal"  hydrological  conditions  within  the  next  4-6  weeks. 

Hetch  Hetchy's  actual  electric  production  varies  widely  with  hydrology  -  from 
about  1.2  to  2.2  billion  kWhrs  per  year.  Since  we  cannot  accurately  predict 
hydrology,  we  assume  "normal"  (historic  average)  hydrological  conditions  at  the 
beginning  of  every  budget  year.  In  other  words,  our  FY01/02  budget  assumes  full 
reservoirs  on  July  1st  and  "normal"  hydrology  thereafter. 

•  Multi-year  power  purchase.  The  daily  California  wholesale  power  market  is 
presently  very  volatile.  Volatility  can  be  significantly  moderated  by  extending  the 
term  of  a  power  purchase  commitment  beyond  the  period  of  resource  shortages. 
Specifically,  the  market  is  presently  quoting  lowest  prices  for  purchase 
commitments  of  5-10  years.  Since  the  market  expects  electric  shortages  to 
continue  for  up  to  3  years,  Hetch  Hetchy  is  issuing  a  request  for  bids  for  a  3,  5,  7 
and  10  year  purchase  of  power. 


and  Retail  customers  are  charged  PG&E  retail  rates. 


34 


Attachment  EI 
Page  6  of 7 

In  addition,  Hetch  Hetchy  constantly  seeks  improvements  to  its  net  revenues  through  a 
combination  of  reduced  costs  of  service  and  new  sources  of  revenues.  These  efforts  will 
continue  diligently  throughout  the  next  and  future  years.  However,  since  results  are 
speculative  at  present,  we  would  not  recognize  the  impact  of  any  net  revenue 
improvements  in  Hetch  Hetchy's  budget  until  such  time  as  an  opportunity  has  progressed 
to  a  point  where  its  successful  implementation  seems  fairly  certain. 

Salary  Savings 

In  Hetch  Hetchy's  request  for  supplemental  appropriation,  we  indicated  an  expectation  of 
approximately  $1  million  in  salary  savings  during  FY00/01.  As  you  know,  Hetch  Hetchy 
commenced  a  reorganization  during  calendar  year  2000.  That  reorganization  is  still  in 
progress.  A  major  part  of  that  reorganization  involved  significantly  upgrading  the  skills 
of  existing  and  new  Hetch  Hetchy  professional/technical  staff  such  that  they  could  help 
Hetch  Hetchy  aggressively  pursue  new  business  opportunities  and  restore  the  levels  of 
economic  benefits  Hetch  Hetchy  produced  prior  to  the  electric  restructure.  However,  it 
took  a  bit  longer  than  we  expected  to  develop  and  implement  the  class  consolidation 
strategy  needed  to  implement  the  reorganization.  As  a  result,  we  have  a  significant 
number  ot  vacancies  which  produced  the  $  1  million  in  projected  salaries  savings. 

On  November  13,  2000,  DHR  approved  the  consolidation  of  six  classifications  in  the 
Energy  Conservation  and  the  Water  and  Power  Resource  Planning  series  into  two 
professional/technical  classifications:  the  5601  Utility  Analyst  and  the  5602  Utility 
Specialist.  The  purpose  of  this  class  consolidation  was  to  significantly  streamline  the 
process  of  recruiting  and  hiring  a  wide  range  of  analytical  and  project  development  staff 
-  from  power  marketers  and  schedulers,  to  hydrologists,  economists,  environmental 
experts,  energy  efficiency  experts,  and  renewable  energy  developers.  Recruitment  began 
on  November  22,  2000.  We  are  presently  in  the  process  of  reviewing  the  applicant  pool 
and  making  offers.  We  expect  to  fill  12  professional7technical  vacancies  within  the  next 
4-6  weeks. 

These  positions  are  of  critical  importance  to  Hetch  Hetchy's  mission  and  are  the 
foundation  of  Hetch  Hetchy's  business  analysis  and  project  development.  Now  that  the 
class  consolidation  has  been  approved,  we  intend  to  fill  all  of  these  vacancies 
expeditiously.  Five  of  these  positions  will  implement  the  aggressive  energy  conservation 
and  efficiency  projects  that  are  needed  to  implement  the  Mayor's  directive  of  a  5% 
energy  savings  by  Summer  2001  and  a  10%  energy  saving  by  Summer  2002.  Three  of 
these  positions  will  develop  and  implement  renewable  energy  and  distributed  generation 
projects,  including  solar,  wind,  fuel  cells  and  natural  gas  cogeneration.  Two  positions  will 
serve  as  the  City's  experts  in  matters  concerning  "siting"  of  power  generation  and 
transmission  facilities,  with  a  goal  of  minimizing  air  emissions  and  other  environmental 
impacts  and  attaining  the  public  policy  goal  of  "environmental  justice."  The  remaining 
two  positions  are  needed  to  support  Hetchy  Hetchy's  wholesale  water  and  power 
operations,  especially  in  power  marketing  and  water  supply  planning. 


35 


Attachment  HI 
Page  7  of  7 

The  projected  $1  million  in  salary  savings  assumes  that  we  will  fill  all  of  these  vacancies 
within  the  next  4-6  weeks. 

Capital  Project  Deobligations 

Hetch  Hetchy  has  critically  reviewed  its  current  capital  projects  and  determined  that  the 
proposed  New  Moccasin  Penstock  Project  can  be  deferred  for  1-2  years  without  risk  to 
public  health  and  safety.  We  are  presently  completing  engineering  design  on  this  project 
but  intend  to  defer  putting  the  project  out  to  bid  until  next  year.  In  the  meantime,  we 
have  set  aside  the  balance  of  $7.4  million  remaining  in  the  New  Moccasin  Penstock 
Project  in  case  it  is  needed  to  meet  additional  unbudgeted  power  purchases. 

There  are  two  existing  penstocks  at  Moccasin  Powerhouse.  It  is  our  intent  to  build  the 
new  Moccasin  Penstock  before  taking  the  existing  penstocks  out  of  service  for 
maintenance  and  repairs.  In  this  manner,  the  reliability  of  this  segment  of  the  City's 
water  delivery  system  will  be  maintained. 

The  repair  of  the  existing  penstocks  has  been  deferred  until  FY02/03.  Therefore,  the  new 
Moccasin  Penstock  can  also  be  deferred  until  that  time.  It  is  our  intent  to  request 
refunding  of  this  project  in  FY02/03.  When  both  existing  penstocks  are  repaired  and  the 
new  penstock  placed  in  service,  generation  at  Moccasin  Powerhouse  will  increase  by 
approximately  3%,  or  12,000  MWhrs  per  year. 


Distribution 

Mayor's  Budget  Office  -  James  Maclachlan 

Controller's  Office  -  Matthew  Hymel 

PUC  General  Manager  -  John  P.  Mullane,  Jr. 

PUC  Assistant  General  Managers  -  Larry  Klein,  Bill  Berry 

PUC  Finance  -  Kingsley  Okereke,  Carlos  Jacobo 

HHWP  -  Senior  Management  Staff 

Records 


36 


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37 


Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 


Item  5  -  File  01-0145 


Department: 


Item: 


Location: 


Sheriffs  Department 

Treasure  Island  Development  Authority 

Resolution  approving  a  sublease,  retroactive  to  July  1, 
2000,  between  the  City  and  the  Treasure  Island 
Development  Authority  for  property  on  Treasure  Island 
commonly  known  as  the  Treasure  Island  Naval  Brig,  or 
jail,  (Buildings  670  &  671),  located  at  the  Corner  of  13th 
and  M  Streets  on  Treasure  Island,  for  an  annual  rent  not 
to  exceed  $250,000  per  year. 

Treasure  Island  Brig  facility  (Buildings  670  &  671), 
located  at  the  Corner  of  13th  and  M  Streets 


Lessor: 
Lessee: 

Sublessee: 

Term  of  Sublease: 


Purpose  of  Sublease:     Under  the  proposed  sublease,  the  Sheriffs  Department 

would— use— the-Treasure— I-s-1-a-nd— Naval— Brig  for-training 

and,  in  the  case  of  an  emergency,  overflow  jail  facilities. 

U.S.  Navy  (Master  Lease) 

Treasure  Island  Development  Authority 

Sheriffs  Department 

Commencing  retroactively  to  July  1,  2000  and 
terminating  on  May  15,  2005,  for  a  sublease  term  of  four 
years  and  eleven  months  (See  Comment  No.  1).  Under  the 
proposed  sublease,  the  Sheriffs  Department  would  have 
three  options  for  using  the  Naval  Brig  ("the  Brig")  facility: 

1)  The  Sheriffs  Department  would  be  authorized  to  use 
the  Brig  facility  for  a  total  of  90  days  per  fiscal  year  for 
Deputy  Sheriff  training  purposes; 

2)  Additionally,  upon  written  notice  of  an  emergency  to 
the  Treasure  Island  Development  Authority,  the 
Sheriffs  Department  would  be  able  to  use  the  Brig 
facility  during  an  emergency  to  house  approximately 
100  nonviolent  prisoners  during  the  duration  of  the 
emergency.1  Under  the  proposed  sublease,  the  Sheriffs 


1  The  proposed  lease  defines  "emergency"  as  "...any  situation  or  condition  in  the  City  and 
County  of  San  Francisco  which  creates  a  widespread  threat  to  life,  property,  or  the  welfare  of 
the  City  and  County  of  San  Francisco  or  its  citizens  as  determined  by  the  Mayor." 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 
38 


Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 


Right  of  Renewal: 


Department  would  not  be  charged  additional  rent  by 
the  Treasure  Island  Development  Authority  for  such 
emergency  use  of  the  Brig  facility; 

3)  The  Sheriffs  Department  may  request  permission 
from  the  Treasure  Island  Development  Authority  to 
use  the  Brig  facility  during  non-emergencies  to:  (a) 
temporarily  house  approximately  100  nonviolent 
prisoners,  or  (b)  use  the  facility  for  any  use,  such  as 
longer-term  housing  of  inmates,  approved  in  writing 
by  the  Executive  Director  of  the  Treasure  Island 
Development  Authority.  The  Sheriffs  Department 
would  be  required  to  make  such  requests  at  least  30 
days  prior  to  the  date  the  Sheriffs  Department  would 
like  to  begin  using  the  facility.  According  to  Mr. 
Stephen  Proud  of  the  Treasure  Island  Development 
Authority,  before  granting  permission  for  such  non- 
emergency use  of  the  Brig  facility,  the  Treasure  Island 
Development  Authority  would  have  the  option  to 
negotiate  an  amended  lease  including  an  increased 
rent  with  the  Sheriffs  Department  if  the  Sheriffs 
Department  proposed  using  the  facility  for  an 
extended  period  of  time.  Such  a  lease  amendment  and 
any  related  additional  funds  would  be  subject  to 
approval  by  the  Board  of  Supervisors.  The  subject 
sublease  states  that  the  Treasure  Island  Development 
Authority  "...shall  not  unreasonably  withhold 
permission  to  use  the  Premises  during  such  non- 
emergency and/or  non-Permitted  Use  Period." 

None 


Number  of 
Square  Feet: 


Approximately  2.25  acres  (98,010  square  feet),  including 
approximately  28,163  square  feet  for  the  Brig  building. 
The  balance  of  69,847  square  feet  (98,010  less  28,163) 
would  be  used  by  the  Sheriffs  Department  for  secured 
prisoner  outdoor  recreation  and  parking. 


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Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 

Rent  and  Other  Costs 

Payable  to  the  Treasure 

Island  Authority  by  the 

Sheriffs  Department:    $250,000  per  year,  paid  annually  in  advance  of  July  1st  for 

each,  fiscal  year  during  the  four-year  and  eleven-month 
term  of  the  lease.  In  addition  to  the  $250,000  annual  rent, 
the  City  will  be  required  to  pay  to  Treasure  Island 
Development  Authority  additional  fees  of  $19,620  per 
year,  including: 

(1)  The  City  will  pay  for  the  Common  Area  Maintenance 
Charge  (Navy  CAM  Charge)  fee  charged  by  the  Navy 
to  the  Treasure  Island  Development  Authority  under 
the  Master  Lease.  Under  the  proposed  sublease,  the 
Sheriffs  Department  would  be  required  to  pay  $900 
per  month,  or  $10,800  annually,  to  the  Treasure 
Island  Development  Authority  for  the  CAM  Charge.2 


(2)  The  City  will  pay  to  the  Treasure  Island  Development" 
Authority  a  monthly  Landscaping  Charge  of  $735,  for 
a  total  annual  charge  of  $8,820. 

Therefore,  the  total  annual  charges  to  be  paid  by  the 
Sheriffs  Department  to  the  Treasure  Island  Development 
Authority  will  be  $269,620  ($250,000  in  rent  plus  $19,620 
in  additional  fees). 

Ms.  Jean  Mariani  of  the  Sheriffs  Department  advises 
that  the  Sheriffs  Department  will  make  Navy  CAM  and 
Landscaping  payments  monthly  to  the  Treasure  Island 
Development  Authority,  for  the  entire  term  of  the 
sublease,  whether  the  Sheriffs  Department  is  using  the 
facility  or  not.  The  proposed  sublease  contains  no 
provisions  for  annual  adjustments  for  the  rent,  the  CAM 
or  the  Landscaping  Charge. 


2  According  to  Mr.  Stephen  Proud  of  the  Treasure  Island  Development  Authority,  the  CAM  is  based 
on  SO. 025  per  square  foot  per  month  for  the  28,163  interior  space  of  the  Brig  building  and  SO. 003  per 
square  foot  per  month  for  the  69,847  exterior  space,  totaling  $913.62  per  month.  However,  the 
proposed  sublease  states  that  the  Navy  CAM  charge  is  not  to  exceed  $900  per  month.  Therefore  the 
Sheriffs  Department  would  be  required  to  pay  to  the  Treasure  Island  Development  Authority  $900 
per  month,  or  $10,800  annually. 

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Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 


Source  of  Funds: 


Ms.  Mariani  advises  that  the  Sheriffs  Department's 
Fiscal  Year  2000-2001  General  Fund  budget  includes 
$269,620  to  fund  the  $250,000  in  rent  and  $19,620  in 
additional  fees  discussed  above,  which  the  Sheriffs 
Department  must  pay  to  the  Treasure  Island 
Development  Authority  for  Fiscal  Year  2000-2001  (See 
Comment  No.  4). 


Utilities  and 
Maintenance: 


Description: 


Under  the  proposed  sublease,  the  City  would  pay  for  all 
maintenance  and  utility  costs  at  the  Brig  facility.  Mr. 
Stephen  Proud  of  the  Treasure  Island  Development 
Authority  advises  that  the  City  would  be  required  to  pay 
these  costs,  estimated  at  $92,000  annually,  year  round  for 
the  entire  four  years  and  eleven  months  of  the  sublease 
term.  (See  Comment  No.  4  for  all  estimated  costs.) 


lay  2,  1997,  the  Board  of  Supervisors  authorized  the 
creation  of  the  Treasure  Island  Development  Authority  as 
a  nonprofit  public  benefit  corporation  to  act  as  a  single 
entity  focused  on  the  planning,  redevelopment, 
reconstruction,  rehabilitation,  reuse  and  conversion  of 
former  United  States  Naval  Station  Treasure  Island 
(Resolution  No.  244-97-3).  On  October  12,  1997,  the 
California  Legislature  approved  the  Treasure  Island 
Conversion  Act  of  1997,  which  designated  the  Authority 
as  a  trustee  of  the  State  Tidelands  Trust  and  as  a 
redevelopment  agency  with  jurisdiction  over  Treasure 
Island  and  Yerba  Buena  Island.  The  Treasure  Island 
Development  Authority  currently  leases  from  the  Navy 
the  Treasure  Island  Brig  facility,  discussed  below,  under  a 
five-year  Master  Lease,  which  began  on  April  5,  1999  and 
will  terminate  on  April  4,  2004.  (See  Comment  No.  2 
below). 

The  proposed  resolution  would  authorize  a  sublease 
between  the  City  and  the  Treasure  Island  Development 
Authority  for  the  Sheriffs  Department  to  use  the  Brig  on 
Treasure  Island.  The  Brig  is  a  two-story,  28,163  square 
foot  jail  facility  built  by  the  Federal  government  in  1992. 
As  described  above,  under  the  proposed  sublease  the 
Sheriffs  Department  would  have  authority  to  use  the 
Brig  facility,  for:  (1)  90  days  of  officer  training;  (2)  to 
temporarily  house  prisoners  during  an  emergency;  and  (3) 
to   temporarily   house   prisoners    during   non-emergency 

BOARD  OF  SUPERVISORS 
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Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 

periods,  or  for  any  other  use,  as  approved  by  the 
Executive  Director  of  the  Treasure  Island  Development 
Authority.  According  to  Mr.  Proud,  before  granting 
permission  for  such  non-emergency  use  of  the  Brig 
facility,  the  Treasure  Island  Development  Authority 
would  have  the  option  to  negotiate  an  amended  lease  and 
increased  rent  with  the  Sheriffs  Department  if  the 
Sheriffs  Department  proposed  using  the  facility  for  an 
extended  period  of  time,  which  would  be  subject  to 
approval  by  the  Board  of  Supervisors. 

According  to  Ms.  Mariani,  the  Sheriffs  Department 
currently  plans  to  use  the  Brig  facility  as  a  training 
facility  and  as  a  temporary  emergency  overflow  jail.  Ms. 
Mariani  reports  that  the  training  to  take  place  at  the  Brig 
would  consist  of  an  annual  Advanced  Officer  course  for  all 
sworn  employees  working  in  City  and  County  jails  and  a 
-4our^to-seyen-week- intKdu^ory^^our^e--fbr— new-ly-hir&d- 


officers.  According  to  Ms.  Mariani,  the  Sheriffs 
Department  would  use  the  Brig  facility  as  a  temporary 
overflow  jail  for  emergencies  such  as  large  protests  that 
result  in  mass  arrests.  Furthermore,  Ms.  Mariani  advises 
that  the  Sheriffs  Department  does  not  have  alternative 
vacant  space  for  overflow  housing  of  prisoners.  In  the 
past,  when  the  Sheriffs  Department  has  faced  jail 
overcrowding,  the  Sheriffs  Department  has  rented  jail 
space  from  other  jurisdictions,  and  when  such  space  is  not 
available,  the  Sheriffs  Department  has  been  forced  to 
release  prisoners  from  custody  early,  according  to  Ms. 
Mariani  and  as  stated  in  Attachment  I,  provided  by  the 
Sheriffs  Department. 

Tenant 

Improvements:  The  Fiscal  Year  1997-98  budget,  as  finally  approved  by 

the  Board  of  Supervisors,  included  a  $2,100,000  General 
Fund  reserve  for  the  Treasure  Island  Brig  project.  The 
Sheriffs  Department  planned  a  project  that  would  convert 
the  Treasure  Island  Brig  facility  to  a  permanent  jail 
facility  that  would  house  140  prisoners  in  order  to  relieve 
jail  overcrowding  at  County  Jail  No.  3  in  San  Bruno.  Ms. 
Mariani  advises  that  the  Sheriffs  Department  was  never 
able  to  operate  the  Treasure  Island  Brig  as  a  full-time  jail 
due  to  insufficient  staffing  (discussed  further  in  Comment 
No.  6  below).  Ms.  Mariani  advises  that  since  1997,  the 
Sheriffs  Department  has  expended  a  total  of  $1,099,409 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 

in  capital  improvements,  listed  as  construction  costs  in 
Attachment  II,  provided  by  the  Sheriffs  Department.  In 
addition,  Attachment  III  provided  by  the  Sheriffs 
Department  contains  an  explanation  of  these  projects  and 
the  amount  originally  budgeted  for  these  projects,  totaling 
$1,380,000  or  $280,591  less  than  the  actual  expenditures 
of  $1,099,409  due  to  savings  realized  during  construction, 
according  to  Ms.  Mariani. 

Comments:  1.  According  to  Ms.  Mariani,  the  proposed  sublease  will 
commence  retroactively  because  the  Sheriffs  Department 
has  been  using  the  Brig  since  July  1,  2000  for  training 
purposes.  Ms.  Mariani  advises  that  the  Sheriffs 
Department  did  not  first  obtain  Board  of  Supervisors 
approval  before  using  the  Treasure  Island  Brig  facility 
because  the  Sheriffs  Department  and  the  Treasure  Island 
Development  Authority  were  negotiating  to  finalize  the 
sublease  documents.  ■ : 


2.  As  noted  previously,  the  Treasure  Island  Development 
Authority  currently  leases  from  the  Navy  the  Treasure 
Island  Brig  facility  under  a  five-year  Master  Lease,  which 
began  on  April  5,  1999  and  will  terminate  on  April  4, 
2004.  The  Budget  Analyst  notes  that  the  term  for  the 
proposed  sublease  between  the  Sheriffs  Department  and 
the  Treasure  Island  Development  Authority  would  expire 
on  May  15,  2005,  more  than  one  year  past  the  expiration 
of  the  Master  Lease  with  the  Navy.  Mr.  Proud  advises 
that  the  Treasure  Island  Development  Authority  expects 
to  complete  the  transfer  of  ownership  of  the  Naval  Station 
on  Treasure  Island  from  the  Navy  to  the  Treasure  Island 
Development  Authority  before  the  Master  Lease  the 
Treasure  Island  Development  Authority  holds  with  the 
Navy  expires.  According  to  Mr.  Proud,  in  the  event  that 
such  a  transfer  does  not  take  place  before  the  Master 
Lease  expires,  the  Treasure  Island  Development 
Authority  would  seek  an  extension  of  the  Master  Lease 
with  the  Navy. 

3.  Ms.  Mariani  reports  that,  since  1997,  the  Sheriffs 
Department  has  expended  a  total  of  $2,335,311  at  the 
Treasure  Island  Brig,  including  a  total  of  $1,099,409  in 
construction  costs  and  $1,235,902  in  operational  costs,  as 
outlined  in  Attachment  II,  provided  by  the  Sheriffs 
Department.     Ms.     Mariani     advises     that     the     total 

BOARD  OF  SUPERVISORS 
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Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 


$1,235,902  in  operating  costs,  including  the  limited 
staffing,  utilities  and  supplies  required  to  support  the 
construction  improvements  taking  place.  The  total 
expenditure  of  $2,335,311  also  includes  $44,248  in 
operating  costs  since  July  1,  2000  for  Fiscal  Year  2000- 
2001.  According  to  Ms.  Mariani,  upon  approval  of  the 
proposed  sublease,  the  Sheriffs  Department  would  also 
pay  to  the  Treasure  Island  Development  Authority  the 
entire  $250,000  in  rent  for  FY  2000-2001,  plus  the  $900 
monthly  Navy  CAM  fees  and  the  $735  monthly 
Landscaping  fees,  discussed  above,  retroactive  to  July  1, 
2000,  for  a  approximate  total  one-time  payment  of 
$263,080  ($250,000  rent  plus  $7,200  for  eight  months  of 
Navy  CAM  fees  and  $5,880  for  eight  months  of 
Landscaping  fees,  for  July  of  2000  through  February  of 
2001).  Ms.  Mariani  advises  that  the  Sheriffs  Department 
has  a  total  of  $269,620  in  the  department's  Fiscal  Year 
2000-2001  budget  to  cover  this  one-time  payment  of 
$263,080,  as  well  as  the  $3,600  in  Navy  CAM  fees  and 
$2,940  for  the  remaining  four  months  of  Fiscal  year  2000- 
2001  (March  through  June  of  2001). 

4.  As  shown  in  Attachment  II,  provided  by  the  Sheriffs 
Department,  annual  cost  to  the  Sheriffs  Department  for 
the  proposed  lease  and  operation  of  the  Treasure  Island 
Brig  would  be  an  estimated  $373,620  per  year.  This 
annual  budget  of  $373,620  includes:  (a)  $269,620  in  rent 
and  additional  fees  to  be  paid  to  the  Treasure  Island 
Development  Authority  ($250,000  for  rent  plus  $10,800 
for  the  Navy  CAM  Charge  plus  $8,820  in  Landscaping 
fees),  (b)  $80,000  for  utilities,  (c)  $12,000  for  maintenance, 
(d)  $10,000  for  contractual  services,  including  pest  control 
and  the  purchase  of  bottled  water,  and  (e)  $2,000  for 
materials  and  supplies.  Ms.  Mariani  advises  that  the 
Sheriffs  Department  would  use  existing  staff  and  salaries 
to  provide  staffing  at  the  Brig  during  training  periods. 
According  to  Ms.  Mariani,  if  the  Sheriffs  Department 
were  to  house  prisoners  temporarily  at  the  Brig  during  an 
emergency,  the  Sheriffs  Department  would  most  likely 
staff  the  facility  using  overtime  funds.  Depending  on  the 
scale  of  the  emergency,  the  Sheriffs  Department  would 
either  fund  the  additional  costs  of  operating  an  emergency 
overflow  jail  at  the  Brig  from  existing  budgeted  funds  or 
be  required  to  request  a  supplemental  appropriation  for 
such  unexpected  costs,   according  to  Ms.   Mariani.   Ms. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

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Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 

Mariani  advises  that  the  Sheriffs  Department  is  unable 
to  provide  an  estimate  for  how  much  additional  funding 
would  be  needed,  since  such  an  estimate  would  depend 
entirely  on  the  magnitude  of  emergency. 

5.  Under  the  proposed  sublease,  the  Sheriffs  Department 
would  not  have  exclusive  rights  to  the  Treasure  Island 
Brig.  The  sublease  states  that  the  Treasure  Island 
Development  Authority  "...shall  have  the  right  to  enter 
and  use  the  Premises  at  any  time  during  the  Term  of  this 
Agreement  which  does  not  conflict  with  any  Permitted 
Use  Period."  Mr.  Proud  advises  that  such  provision  was 
included  to  allow  the  Treasure  Island  Development 
Authority  access  to  the  Treasure  Island  Brig,  when  the 
Sheriffs  Department  was  not  using  the  facility,  for 
purposes  such  as  renting  the  facility  to  film  studios  or 
other  short-term  purposes. 


6.  In  1997  the  Sheriffs  Department  began  plans  to 
renovate  the  Treasure  Island  Brig  facility  in  order  to  use 
the  Treasure  Island  Brig  as  a  full-time  County  Jail. 
Initially,  the  Sheriffs  Department  proposed  housing  an 
average  of  130  to  140  prisoners  who  would  otherwise  be 
housed  at  Jail  No.  3  in  San  Bruno,  as  part  of  an  effort  to 
relocate  as  many  inmates  as  possible  from  Jail  No.  3  in 
anticipation  of  the  United  States  District  Court 
stipulating  that  the  Sheriffs  Department  must  reduce  the 
inmate  population  at  San  Bruno  Jail  No.  3.  However,  Ms. 
Mariani  advises  that  ultimately,  the  Sheriffs  Department 
was  able  to  fulfill  required  improvements  at  the  San 
Bruno  Jail  No.  3,  outlined  by  the  United  States  District 
Court,  without  relocating  prisoners  to  the  Treasure  Island 
Brig.  As  described  in  further  detail  below,  the  Sheriffs 
Department  completed  capital  improvements  at  the 
Treasure  Island  Brig  during  Fiscal  Years  1997-1998  and 
1998-1999.  However,  in  Fiscal  Year  1999-2000,  the 
Sheriffs  Department  was  unable  to  house  inmates  at  the 
Treasure  Island  Brig  due  to  insufficient  staffing. 

Ms.  Mariani  advises  that  after  the  Sheriffs  Department 
completed  its  capital  improvements  to  the  Treasure 
Island  Brig,  in  Fiscal  Year  1999-2000  the  department 
began  using  the  Treasure  Island  Brig  for  training 
purposes.  Mr.  Proud  advises  that  the  Sheriffs 
Department  did  not  pay  any  rent  to  the  Treasure  Island 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 


Development  Authority  during  completion  of  the  capital 
improvements  at  the  Treasure  Island  Brig  or  during  the 
subsequent  period  of  training  during  Fiscal  Year  1999- 
2000. 

Fiscal  Year  1997-1998 

In  November  of  1997  the  Board  of  Supervisors  approved  a 
supplemental  appropriation  of  $1,699,955  (File  101-97-20) 
to  fund  capital  improvements  and  operating  costs  at  the 
Treasure  Island  Brig,  as  well  as  to  fund  24  new  positions 
(22  Deputy  Sheriffs  and  two  engineers),  which  the  Board 
of  Supervisors  also  approved  in  1997  to  staff  the  Treasure 
Island  Brig.3  However,  Ms.  Mariani  advises  that  Sheriffs 
Department  did  not  house  inmates  at  the  jail  in  Fiscal 
Year  1997-1998  because  the  capital  improvements 
required  more  time  than  was  originally  expected  and 
were  not  completed  until  the  end  of  Fiscal  Year  1998- 
1999r^te^^^r^sult7=the^Sheriff  s"  Department  expended" a" 
total  of" $9327289  on  ~the~Treasure  Island  Brig  in  Fiscal 
Year  1997-1998,  as  shown  in  Attachment  II.  The  total 
expended  amount  of  $932,289  included  $573,560  in 
capital  costs  and  $358,729  in  operating  costs  for  the 
limited  staffing,  utilities  and  supplies  required  to  support 
the  construction  improvements  taking  place,  according  to 
Ms.  Mariani.  Ms.  Mariani  advises  that  the  Sheriffs 
Department  did  not  fill  the  24  new  positions  approved  the 
previous  fiscal  year  and  instead  used  the  resulting  salary 
savings  to  fund  deficits  in  other  accounts  in  the 
department's  budget. 

Fiscal  Year  1998-1999 

According  to  Ms.  Mariani,  in  Fiscal  Year  1998-1999,  the 
Sheriffs  Department  was  appropriated  $5,989,987  in  its 
original  budget,  for  operating  costs  ($5,173,526)  and 
additional  capital  improvements  ($816,461)  to  run  a  full- 
time  jail  at  the  Treasure  Island  Brig.  Ms.  Mariani  advises 
that  the  budgeted  amount  for  operating  costs  included 
approximately  $2.3  million  for  the  salaries,  benefits  and 
related  costs  of  approximately  42  existing  positions  to  be 
transferred  from  the  San  Bruno  Jail  No.  3  to  the  Treasure 
Island  Brig.  However,  the  Sheriffs  Department  again 
postponed  operating  the  Brig  as  a  full-time  jail  in  order  to 


3  The  $1,699,955  appropriation  was  made  from  a  $2,100,000  General  Fund  Reserve  that  was 
established  by  the  Board  of  Supervisors  in  the  Fiscal  Year  1997-98  budget  for  the  Naval  Brig 
on  Treasure  Island. 

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BUDGET  ANALYST 

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Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 

complete  additional  improvements  necessary  for  housing 
inmates,  according  to  Ms.  Mariani.  Ms.  Mariani  advises 
that  in  Fiscal  Year  1998-1999,  the  Sheriffs  Department 
expended  $1,135,018  at  the  Treasure  Island  Brig,  as 
outlined  in  Attachment  II,  leaving  a  balance  of  $4,854,969 
(original  budget  of  $5,989,987  less  expenditures  of 
$1,135,018).  Of  this  balance  of  $4,854,969,  Ms.  Mariani 
advises  that  approximately  $2.3  million  funded  the 
existing  42  employees  discussed  above,  which  remained  at 
the  San  Bruno  Jail  No.  3  and  were  never  transferred  to 
the  Treasure  Island  Brig  as  previously  planned.  Ms. 
Mariani  advises  that  in  Fiscal  Year  1998-1999,  the 
Sheriffs  Department  again  postponed  filling  the  24  new 
positions  approved  in  Fiscal  Year  1997-1998,  and  the 
department  used  the  resulting  salary  savings  of 
approximately  $2,554,969  to  fund  deficits  in  other 
accounts  in  the  department's  budget. 


Fiscal  Year  1999-2000 

Ms.  Mariani  advises  that  for  Fiscal  Year  1999-2000,  the 
Sheriffs  Department  was  appropriated  $5,195,625  in  its 
original  budget  for  expenditures  at  the  Treasure  Island 
brig.  However,  in  Fiscal  Year  1999-2000,  the  Sheriffs 
Department  was  unable  to  house  inmates  at  the  Treasure 
Island  Brig  due  to  insufficient  staffing,  according  to  Ms. 
Mariani.  Ms.  Mariani  advises  that  a  growing  inmate 
population  in  the  County  required  the  Sheriffs 
Department  to  operate  San  Bruno  Jail  No.  3  at  full 
capacity,  thus  preventing  the  Sheriffs  Department  from 
transferring  the  existing  42  San  Bruno  positions  to  the 
Treasure  Island  Brig  and  leaving  the  Treasure  Island 
Brig  with  insufficient  staff  to  operate  as  a  jail.  Ms. 
Mariani  states  in  Attachment  I  that  the  Sheriffs 
Department  has  never  received  full  funding  to  operate  the 
Treasure  Island  Brig  and  all  other  jails  in  the  system  at 
full  capacity  at  the  same  time.  Ms.  Mariani  further 
advises  that  the  Treasure  Island  Brig  is  a  very  labor- 
intensive  jail  and  that  operating  San  Bruno  Jail  No.  3  at 
full  capacity  is  more  cost  effective  than  transferring 
inmates  to  the  Treasure  Island  Brig.  As  stated  previously, 
the  Sheriffs  Department  had  originally  made  plans  to 
operate  a  full-time  jail  at  the  Treasure  Island  Brig  in 
anticipation  of  the  United  States  District  Court  requiring 
a  reduction  in  the  number  of  inmates  at  San  Bruno  Jail 
No.  3,  which  ultimately  was  not  necessary. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 

LI 


Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 


However,  in  order  to  meet  staffing  requirements  outlined 
by  the  United  States  District  Court's  ruling  against  the 
Sheriffs  Department,  the  Sheriffs  Department 
reassigned  to  the  San  Bruno  Jail  No.  3  the  24  new 
positions  originally  approved  in  Fiscal  Year  1997-1998  for 
the  Treasure  Island  Brig.  As  a  result,  the  Sheriffs 
Department  expended  only  $223,756  of  its  Fiscal  Year 
1999-2000  budget  of  $5,195,625  for  the  Treasure  Island 
Brig.  Ms.  Mariani  advises  that  the  remaining  balance  of 
$4,971,869  was  used:  (a)  to  fund  the  existing  42 
employees  that  were  intended  to  be  transferred  to  the 
Treasure  Island  Brig  but  instead  remained  at  San  Bruno 
Jail,  (b)  to  fill  the  24  positions  approved  in  Fiscal  Year 
1997-1998  for  the  Treasure  Island  Brig,  but  now  needed 
at  the  San  Bruno  Jail  No.  3.  Ms.  Mariani  advises  that  any 
additional  salary  savings  realized  from  position  vacancies 
was_used  to  fund"  dencitsin  other  accounts  in  the  Sheriffs 
Department's  budget. 

7.  Ms.  Mariani  states  in  Attachment  I  that: 

"...While  the  jail  population  has  leveled  off  over 
the  past  year,  it  is  again  on  the  increase.  We 
cannot  predict  the  size  of  our  jail  population  in  the 
future  and  we  will  not  have  a  new  jail  facility  [to 
replace  the  San  Bruno  Jail  No.  3]  for  at  least  three 
years.  Therefore,  it  is  only  prudent  that  we  protect 
the  investment  the  City  has  made  in  [the  Treasure 
Island  Brig]  as  a  hedge  against  future  population 
increases.  It  is  also  insurance  against  another 
Federal  lawsuit  should  the  jails  become 
overcrowded  during  this  period." 

Ms.  Mariani  advises  that,  at  this  time,  the  Sheriffs 
Department  will  take  advantage  of  using  the  Treasure 
Island  Brig  for  training,  which  will  be  greatly  enhanced 
by  having  access  to  actual  jail  cells.  Ms.  Mariani  reports 
that  due  to  the  County's  large  inmate  population,  which 
currently  consist  of  approximately  1,900  inmates  in  the 
City's  eight  jails,  the  Sheriffs  Department  has  no  other 
vacant  jail  space  available  for  training.  Prior  to  the 
Sheriffs  Department  beginning  to  use  the  Treasure 
Island  Brig  for  training  purposes  in  Fiscal  Year  1999- 
2000,    the    Sheriffs   Department   was   required   to   hold 

BOARD  OF  SUPERVISORS 

BUDGET  ANALYST 

48 


Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 

training  in  a  conference  room  located  in  City-owned  office 
space  at  555  7th  Street.  Ms.  Mariani  notes  that  this 
conference  space  does  not  meet  the  Sheriffs  Department's 
training  needs  because  it  is  particularly  important  for 
newly-hired  officers  to  gain  training  experience  in  a 
actual  jail  facility  as  opposed  to  using  a  simulated 
environment.  In  addition,  the  Sheriffs  Department  will 
have  access  to  the  Treasure  Island  Brig  to  house  prisoners 
during  emergencies. 

8.  The  proposed  sublease  states  that  both  the  City  and  the 
Treasure  Island  Development  Authority  "...may 
terminate  this  Sublease  prior  to  the  Expiration  Date  [of 
May  15,  2005]  by  giving  to  the  other  party  written  notice 
of  intent  to  terminate  the  Sublease  one  year  prior  to  the 
intended  date  of  termination." 

9.  According  to  Mr.  Proud,  the  Treasure  Island 
Development  Authority  hired  a  private  firm,  Clifford 
Associates,  to  appraise  the  value  of  the  subject  Treasure 
Island  Brig  facility.  On  July  21,  2000,  the  appraiser 
determined  that  the  fair  market  rent  for  the  Brig  facility 
would  be  $1.1  million  per  year.  Mr.  Proud  advises  that 
the  Treasure  Island  Development  Authority  has  agreed  to 
charge  the  Sheriffs  Department  an  annual  rent  of 
$250,000,  or  22.7  percent  of  the  Brig's  annual  rental 
market  value,  since  the  Sheriffs  Department  will  only  be 
authorized  to  use  the  Brig  facility  for  90  days,  or 
approximately  one-fourth  of  a  year,  per  year  for  training 
purposes.  Mr.  Steve  Alms  of  the  Real  Estate  Division  of 
the  Administrative  Services  Department  has  reviewed  the 
appraisal  of  the  Brig  facility  commissioned  by  the 
Treasure  Island  Development  Authority  and  agreed  that 
the  rent  charged  to  the  Sheriffs  Department  represents 
fair  market  value. 

10.  The  subject  sublease  states  that  the  Sheriffs 
Department: 

"...shall  not  permit  any  inmates  to  be  housed  at 
the  premises  who  have  a  known  record  of  violent 
behavior,  including  without  limitation,  a  known 
record  for  murder,  manslaughter,  assault,  battery, 
rape,  or  sexual  molestation.  Subtenant  [Sheriffs 
Department]  shall  not  permit  any  portion  of  the 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 

Premises  to  be  used  as  a  shooting  range  by  any  of 
tbe  Subtenant's  peace  officers,  personnel,  or 
invitees.  Subtenant  acknowledges  that  there  are 
residential  dwellings  and  a  public  elementary 
school  in  the  general  vicinity  of  the  Premises,  and 
Subtenant  agrees  to  use  good  faith  efforts  to 
prevent  any  interference  with  such  residential  and 
public  school  activities  by  Subtenant's  use  of  the 
Premises." 

Mr.  Proud  advises  that  the  Treasure  Island  Development 
Authority  plans  to  give  residents  on  Treasure  Island  30 
days  notice  of  any  plans  of  the  Sheriffs  Department  to 
house  inmates  in  the  Brig  facility  in  non-emergency 
situations.  In  addition,  Ms.  Mariani  advises  that  the 
training  to  be  conducted  at  the  Brig  by  the  Sheriffs 
Department  will  not  involve  any  live  ammunition  or 
chemical_agents^ 


11.  Under  the  proposed  sublease,  the  Sheriffs 
Department  indemnifies  the  Treasure  Island 
Development  Authority  and  the  Navy,  as  Master 
Landlord,  and  their  agents  and  employees  as  defined  in 
the  lease.  The  proposed  sublease  states: 

"Subtenant  [Sheriffs  Department],  on  behalf  of 
itself  and  Subtenant's  Agents,  covenants  and  agrees 
that  the  Indemnified  Parties  [described  above]  and 
Master  Landlord  shall  not  be  responsible  for  or 
liable  to,  and,  to  the  fullest  extent  allowed  by  any 
Laws,  Subtenant  hereby  waives  all  rights  against 
the  Indemnified  Parties  and  releases  them  from, 
any  and  all  Losses,  including,  but  not  limited  to, 
incidental  and  consequential  damages,  relating  to 
any  injury,  accident  or  death  of  any  person  or  loss  or 
damage  to  any  property,  in  or  about  the  Premises, 
from  any  cause  whatsoever,  including  without 
limitation,  partial  or  complete  collapse  of  any 
improvements  on  the  Premises  due  to  an 
earthquake  or  subsidence,  except  only  to  the  extent 
such  Losses  are  caused  by  the  negligence  or  willful 
misconduct  of  the  Indemnified  Parties." 

According  to  Mr.  Donnell  Choy  of  the  City  Attorney's 
Office,   the   indemnification   provision   contained   in  the 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


REVISED       2/23/01 
Item  5  -  File  01-0145 
Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 

sublease  is  standard  in  all  subleases  entered  into  by  the 
Treasure  Island  Development  Authority  with  any  entity 
wishing  to  sublease  property  on  Treasure  Island.  Mr. 
Choy  advises  that  if  there  were  another  large  earthquake 
comparable  to  or  greater  in  magnitude  than  the  1989 
Loma  Prieta  Earthquake  during  the  term  of  this  sublease, 
the  City  would  not  be  able  to  look  to  the  Treasure  Island 
Development  Authority  to  recover  any  losses  arising 
therefrom,  according  to  Mr.  Choy.  Mr.  Choy  advises  that 
when  the  City  is  acting  as  the  landlord  in  its  own  leases, 
the  City  includes  similarly  broad  indemnification 
provisions  in  its  leases. 

12.  In  summary,  the  Budget  Analyst  notes  the 
following:  (a)  since  Fiscal  Year  1997-1998,  the  Sheriffs 
Department  has  expended  a  total  of  $1,099,409 
(Attachment  II)  in  capital  expenditures  to  convert  the 
T-rpa-si-vrP-T-sl a-nH-Rr-fg-  -i-nf.n- a  j a i  1  nsah1e-hy-t,hA-T,ity^-(b) 


the  Sheriffs  Department  originally  intended  to  house 
approximately  130  to  140  inmates  at  Treasure  Island 
Brig  in  an  effort  to  relieve  overcrowding  at  the  San 
Bruno  Jail  No.  3;  (c)  in  order  to  staff  the  converted 
Treasure  Island  Brig,  the  Sheriffs  Department  received 
24  new  positions  during  Fiscal  Year  1997-1998;  (d)  the 
Sheriffs  Department  was  also  budgeted  funds  to 
operate  the  Treasure  Island  Brig  as  a  full-time  jail, 
including  $5,173,526  in  Fiscal  Year  1998-1999  and 
$5,195,625  in  Fiscal  Year  1999-2000;  (e)  however, 
because  the  Treasure  Island  Brig  configuration  is  such 
that  its  operation  is  more  labor-intensive  than  other 
City  jail  facilities,  the  Sheriffs  Department  was  unable 
to  operate  the  Treasure  Island  Brig  due  to  staffing 
limitations  and,  therefore,  expended  the  additional 
funds  elsewhere  in  the  City  jail  system  to  compensate 
for  an  increase  in  the  prisoner  population;  (f)  by 
requesting  that  the  Board  of  Supervisors  approve  the 
subject  sublease  of  the  Treasure  Island  Brig,  the 
Sheriffs  Department  is  now  proposing  to  use  the 
Treasure  Island  Brig  for  the  alternative  purpose  of 
training  officers  and  maintaining  space  for  emergency 
overflow  housing  of  inmates. 

Recommendation:        Approval  of  the  proposed  resolution  is  a  policy  matter  for 
the  Board  of  Supervisors. 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


City  and  County  of  San  Francisco 


OFFICE  OF  THE  SHERIFF 


Attachment  I 
i?aze  1  ot  2 


Michael  Hennessey 
SHERIFF 

415-554-7225 


February  20,  2001 
Ref.  No.:  CFO  01-002 


TO:  Budget  Analysts  Office 

FROM:  Jean  M.  MarianiJChief  Financial  Officer 


=Si^^eff==tea^e-ijftrT5Tf*5a5ure  Island  Brig 

During  1997,  the  City  was  under  a  federal  court  order  to  resolve  jail 
overcrowding  and  conditions  at  County  Jail  #3  in  San  Bruno.  In 
conjunction  with  the  Mayor  and  the  City  Attorney,  the  Sheriff  proposed 
opening  the  Treasure  Island  Brig  to  reduce  the  population  at  CJ#3  as 
part  of  the  settlement  of  the  lawsuit.  The  Board  of  Supervisors 
approved  a  supplemental  appropriation  that  year,  anticipating 
occupancy  of  the  Brig  sometime  in  the  following  fiscal  year  (see  Lt. 
LaVigne's  February  9,  2001  memorandum  for  a  discussion  of  the 
capital  improvements  related  to  the  facility). 

When  the  final  draft  of  the  settlement  was  presented  to  the  court,  use 
of  the  Treasure  Island  Brig  to  house  prisoners  was  not  included. 
However,  greatly  increased  staffing  at  CJ  #3  was  part  of  the 
settlement,  so  the  staff  approved  for  TI  were  assigned  to  CJ  #3 
instead. 

Because  the  jail  population  was  continuing  to  increase  during  that 
time,  we  were  concerned  that  we  would  have  need  of  the  Brig  for 
overflow  purposes.  We  do  not  have  other  appropriate  vacant  space  for 
housing  prisoners.  In  those  instances  in  the  past  where  we  have  had 
significant  and  serious  overcrowding,  the  Sheriff  has  been  forced  to 
release  prisoners  from  custody  early  (or  rent  space  in  Alameda 
County's  jail,  now  unavailable). 


RCOM  456.  GTY  HAUL 

1  OR.  CARLTON  a.  QaoOLETT  7LACS 


SAM  FHAMCISCO,  CA      »4103 
Kuc.'dixl  fuptr 


FA*    4  15  •  S6-»  -  7CS0 


Attachramt  I 
Page  lofl 


While  the  jail  population  had  leveled  off  over  the  past  year,  it  is  again 
on  the  Increase.  We  cannot  predict  the  size  of  our  jail  population  in  the 
future  and  we  will  not  have  a  new  jail  facility  (to  replace  CJ  #3)  for  at 
least  three  years.  Therefore,  it  is  only  prudent  that  we  protect  the 
investment  the  City  has  made  in  this  facility  as  a  hedge  against  future 
population  increases.  It  is  also  insurance  against  another  federal 
lawsuit  should  the  jails  become  overcrowded  during  this  period. 

In  the  Interim,  the  Sheriff's  Department  has  taken  advantage  of  the 
facility  for  training.  State  training  standards  for  deputy  sheriffs  require 
four  to  six  weeks  of  core  training  in  jail  management  techniques 
before  working  in  a  jail,  as  well  as  24  hours  of  annual  training  for 
continuing  certification.  Having  actual  jail  cells  available  enhances 
training  in  cell  removal  techniques,  etc. 

We  have  used  the  Treasure  Island  Brig  for  prisoners  twice,  during  the 
2000  millennium  weekend,  to  free  upspace  at  the  425-7^  St.  jail  in 
=eas^tr^reiveremTras3_aTrests,  and  for  a  multi-jurisdiction  mass-arrest 

coordination  site  with  the  U.S.  Marshal  and  the  FBI. 


The  attached  spreadsheet  presents  the  Sheriff's  Department 
expenditures  to  date  for  the  Treasure  Island  Brig.  Our  estimated 
annual  costs,  including  lease,  utilities,  and  maintenance  expense,  are 
approximately  $373,620.  The  Mayor's  Office  included  and  the  Board  of 
Supervisors  approved  $260,871  for  this  lease  payment  in  our  2000-01 
budget. 

In  1997-98  and  1998-99,  the  Sheriff's  Department  budget  included 
appropriations  of  $1,699,955  and  $5,989,987  for  operating  the 
Treasure  Island  Brig.  In  1999-00,  we  combined  the  TI  Brig  budget  with 
the  San  Bruno  budget,  and  used  the  vacant  positions  in  the  TI  budget 
to  meet  the  terms  of  the  federal  court  settlement.  The  TI  Brig  Is  a  very 
labor-intensive  jail,  less  cost-effective  to  operate  than  the  Sheriff's 
other  facilities.  The  Sheriff  has  never  received  full  funding  to  operate 
the  TI  Brig  and  all  other  jails  in  the  system  at  full  capacity.  The 
funding  levels  presumed  partial  closure  of  several  floors  of  CJ  #3,  and 
a  transfer  of  those  Inmates  and  deputies  to  TI. 


90 "d   1U101 


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Attachment   III 
Page   1    ot    2 


San  Francisco  Sheriffs  Department 

INTER-OFFICE  CORRESPONDENCE 

Sheriffs  Bureau  of  Building  Services 

Attn:    Ms.  Jean  Mariani     VjjQf)  Friday,  February  09,  2001 

From:  Lt  Michael  La  Vigne  M£-£^ — 

Subj:    Capital  Improvements  at  me  Treasure  Island  Brig 

The  following  is  a  short  history  and  accounting  of  the  capital  improvements  the  3FSD  has 
made  to  date  at  the  Treasure  Island  Brig. 

1 996  -  In  anticipation  of  the  CCSF  taking  over  the  Treasure  Island  &  Yerba  Buena  Island 
properties  from  the  U.  S.  Navy,  inspections  of  the  various  buildings  were  performed  by  CCSF  and 
California  State  officials  having  jurisdiction.  In  mid  1 996  (May  &  June)  the  SFSD  received  copies 
of  seismic,  building  code,  and  fire/life  safety  code  deficiency  reports  from  the  CCSF,  California 
Board  of  Corrections,  and  California  Stale  Fire  Marshal.  The  SFSD  also  reviewed  the  Brig  to 
determine  what  security  or  operational  modifications  would  have  to  be  made  to  accommodate 
prisoners. 

1997  -  Based  upon  the  above  surveys  and  reports,  the  SFSD  developed  a  scope  of  work  to 
correct  the  code,  security  and  operational  issues.  From  this  scope  of  work  a  capital  budget  was 
developed  and  submitted  to  the  CCSF  as  supplemental  budget  request  in  August  of  that  year.  This 
supplemental  budget  request,  along  with  an  ordinance  permitting  the  SFSD  to  contract  for  the 
work,  was  approved  by  the  CCSF  Board  of  Supervisors  in  November  1997.  The  scope  of  work 
was  divided  into  three  basic  contracts  as  indicated  below: 

Electronic  Security  System  Improvements: 

Scope:  Replace  central  control  panel,  add  CCTV  cameras  and  monitors,  repair  and  replace  locks 

and  moving  gates. 
Cost:    $240,000 
Time:   January- April  1998 

Prisoner  Exercise  Yard  Improvements: 

Scope:  Replaces  old  fencing  with  new  double  security  fence  and  paves  over  gravel  exercise  yards. 

Cost:    $340,000 

Time:    July  -  November  1 998 


Page  1  of 2 


Attachment   III 
Page  Zot   Z 


Fire/Life  Safety  Upgrades: 

Scope:  Replaces  old  fire  alarm  system,  apply  spray-on  cementitious  fire  proofing  on  underside  of 
roofs  and  roofing  supports,  replaces  several  doors  and  frames  with  code  compliant 
assemblies,  remodels  paths  of  travel  to  provide  clear  fire  exit  routes,  and  upgrades  and 
expands  the  fire  sprinkler  system- 
Cost:    $500,000 
Time:   September  1998 -March  1999 

In  addition  to  the  above,  the  SFSD  has  made  improvements  to  the  temperature  control  system  of 
the  Brig,  as  well  as  installed  some  kitchen  equipment 

The  CCSF  still  has  some  disability  access  issues  at  the  Brig,  but  at  this  point  we  have  closed  out 
all  construction  contracts,  and  any  disability  access  issues  would  be  addressed  in  the  future. 

If  you  have  any  questions,  please  calL 


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"Memo  to  Finance  Committee 

February  28,  2000  Finance  Committee  Meeting 


Item  6  -  File  01-0270 
Item: 

Amount: 
Source  of  funds: 
Description: 


Comments: 


Supplemental  appropriation  ordinance  in  the  amount  of 
$100,000  for  earthquake  relief  to  India. 

$100,000 

General  Fund  Reserve 

According  to  recent  news  reports,  on  January  26,  2001  an 
earthquake  measuring  7.9  on  the  Richter  scale  occurred 
in  India  killing  over  19,000  persons  and  leaving 
thousands  homeless.  The  proposed  supplemental 
appropriation  would  commit  $100,000  for  disaster  relief  in 
India. 

According  to  the  Office  of  the  Sponsor  of  the  proposed 


ordinance,,  the  proposed  supplemental  appropriation  of 
$100,000  to  India  would  be  coordinated  with  the  Indo- 
American  Trade  and  Commerce  Council's  Gujarat 
Earthquake  Relief  Fund  for  FY  2000-01. 

According  to  Mr.  Steve  Kawa  of  the  Mayor's  Office,  the 
disaster  relief  contribution  would  be  disbursed  through 
the  Mayor's  Office  of  Economic  Development  (MOED).  Mr. 
Kawa  adds  that  MOED  would  be  responsible  for  assuring 
that  the  funds  are  contributed  to  the  Indo-American 
Trade  and  Commerce  Council  Relief  Fund  and  used  for 
the  intended  purpose  of  providing  relief  for  the  India 
earthquake  victims. 

1.  On  February  5,  2001,  the  Board  of  Supervisors 
approved  a  resolution  (File  01-0176)  expressing  sympathy 
and  concern  for  the  earthquake  victims  in  western  state  of 
Gujarat,  India,  extending  condolences  to  family  members 
of  those  who  have  passed  away  and  urging  President 
Bush,  the  United  States  Senate  and  the  House  of 
Representatives  to  use  all  available  resources  and  funds 
to  augment  and  expedite  existing  relief  efforts  to 
earthquake  victims  and  their  families. 

2.  In  October  of  1999,  the  Board  of  Supervisors  approved 
an  appropriation  of  $250,000  for  earthquake  relief  efforts 
in    the    City    of  Taipei.    Also,    in    1995,    $50,000    was 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


TMemo  to  Finance  Committee 

February  28,  2000  Finance  Committee  Meeting 

appropriated  by  the  Board  of  Supervisors  for  earthquake 
relief  in  the  City  of  Osaka  following  the  Kobe  earthquake. 

3.  On  February  21,  2001,  the  Finance  Committee 
recommended  approval  of  a  supplemental  appropriation 
of  $100,000  for  earthquake  relief  in  El  Salvador  (File  01- 
0272). 

Recommendation:  Approval  of  the  proposed  ordinance  is  a  policy  matter  for 

the  Board  of  Supervisors. 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 


Item  8 -File  01-0223 

Department: 

Item: 


Amount: 
Source  of  Funds: 
Description: 


Department  of  Public  Health  (DPH) 

Resolution  endorsing  the  transfer  of  State  General  Fund 
monies,  previously  allocated  to  the  DPH,  to  the  California 
Mental  Health  Directors  Association  for  a  contract  to 
provide  services  to  foster  care  and  other  Medi-Cal  eligible 
children  who  are  residents  of  San  Francisco  but  are 
placed  in  facilities  outside  of  San  Francisco. 

$48,330 

State  of  California  General  Fund 

In  FY  1999-2000,  the  DPH  began  participating  in  a 
Statewide  contract  with  other  counties  for  the  provision  of 
mental  health  .services -to",  children  placed  in  out-of-county- 
foster  care  facilities.  The  California  Mental  Health 
Directors  Association  (CMHDA),  a  nonprofit  organization 
comprised  of  mental  health  directors  Statewide,  entered 
into  a  contract  with  a  Statewide  Administrative  Services 
Organization  (ASO),  a  private  behavioral  health 
organization,  in  November  of  1999,  to  provide  mental 
health  referral  services  for  children  placed  in  out-of- 
county  foster  care  facilities.  Under  the  current  Statewide 
contract  with  ASO,  a  foster  parent,  requesting  mental 
health  services  for  a  child  residing  in  San  Francisco  to  be 
placed  in  an  out-of-county  foster  care  facility,  would  not 
require  prior  DPH  authorization  as  was  previously 
required.  Instead,  the  contractor,  ASO,  would  be 
authorized  to  provide  a  mental  health  referral  directly  to 
the  foster  parent. 

Under  the  ASO  contract,  the  ASO  would  pay  the  mental 
health  provider  directly  for  the  mental  health  services 
provided  to  foster  care  and  other  Medi-Cal  eligible 
children  and  would  receive  reimbursement  from  CMHDA, 
including  provider  payments  and  administrative  fees 
under  the  contract  term  period  of  November  1,  1999 
through  June  30,  2001. 

Under  the  proposed  resolution,  San  Francisco's  DPH 
would  transfer  to  CMHDA  $48,330  of  the  State  General 

BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


Memo  to  Finance  Committee 


February  28,  2001  Finance  Committee  Meeting 


Fund  monies  previously  allocated  for  distribution  to  San 
Francisco  for  such  mental  health  services  for  FY  2000-01. 
These  subject  State  General  Fund  monies  would  be  used 
to  reimburse  CMHDA  for  payments  made  to  the  ASO  for 
mental  health  services  to  be  provided  to  foster  care  and 
other  Medi-Cal  eligible  children  who  are  residents  of  San 
Francisco  but  who  are  placed  in  facilities  outside  of  San 
Francisco.  According  to  Dr.  Albert  Eng  from  the  DPH,  the 
DPH,  and  not  the  State,  determines  the  amount  of  State 
General  Fund  monies  to  be  transferred  to  the  CMHDA  to 
contract  with  the  ASO  to  provide  services  to  foster  care 
and  other  Medi-Cal  eligible  children  placed  outside  of  San 
Francisco.  Dr.  Eng  estimates  that  the  proposed  transfer 
of  $48,330  will  be  more  than  sufficient  to  cover  the  costs 
of  mental  health  services  provided  to  foster  care  and  other 
Medi-Cal  eligible  children  placed  outside  of  San  Francisco 
for  FY  2000-2001. 


In  addition,  San  Francisco  is  eligible  to  receive  $51,670  in 
Federal  matching  funds  in  FY  2000-01  for  total  funding  of 
$100,000  ($48,330  State  General  Fund  monies  +  $51,670 
Federal  matching  funds)  for  the  mental  health  services 
provided  to  children  placed  in  out-of-county  foster  care 
facilities. 

Comments:  1.  According  to  Dr.  Eng,  the  purpose  of  transferring  the 

subject  State  funds  in  the  amount  of  $48,330  from  the 
State  to  the  CMHDA,  to  provide  reimbursement  for  the 
subject  services,  is  to  facilitate  access  to  mental  health 
services  for  foster  children  placed  in  out-of-county  foster 
care  faculties. 

2.  Dr.  Eng  states  that  the  proposed  transfer  by  DPH  of 
State  funds,  previously  allocated  to  the  DPH,  to  the 
California  Mental  Health  Directors  Association  would 
facilitate  the  authorization  and  reimbursement  process 
for  mental  health  services  provided  to  children  placed  in 
out-of-county  foster  care  facilities,  and  that  the  transfer  of 
such  funds  would  not  result  in  any  additional  costs  to  San 
Francisco.  The  current  contract  with  CMHDA  for 
coordination  with  ASO  will  expire  on  June  30,  2001.  Dr. 
Eng,  anticipates  that  the  contract  with  CMHDA  would  be 
renewed. 


BOAKD  OF  SUPERVISORS 

BUDGET  ANALYST 

60 


Memo  to  Finance  Committee 

February  28,  2001  Finance  Committee  Meeting 

Recommendation:  Approve  the  proposed  resolution. 


Harvey  M.  Rose 


Supervisor  Leno 
Supervisor  Peskin 
Supervisor  Gonzalez 
Clerk  of  the  Board 
Controller 
Steve  Kawa 


BOARD  OF  SUPERVISORS 
BUDGET  ANALYST 


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